The Hidden Costs of Owning Vacant Land in Pennsylvania

Owning Vacant Land in Pennsylvania

Vacant land can be a valuable investment. Owning vacant land in Pennsylvania can also have hidden costs; these costs can be exposed immediately or in the long run. There are annual taxes and potentially property owner’s association fees to consider. There are not as many real estate tax benefits, consistent cash flow, property maintenance issues, and the current real estate market conditions to consider. Considering every aspect of owning property before purchasing empty land is vital. Call Buying Property 215 at [215-359-6090] to discuss the hidden costs of owning vacant land in Pennsylvania! Suppose you’re a property owner considering the possibility of selling your property. In that case, our family-owned real estate company can provide you with multiple options to successfully sell the property for the most incredible price! 

Annual Cost

Purchasing vacant land might not be as expensive as purchasing a house, but don’t forget about the annual taxes! Depending on the location and zoning of your land, the tariffs might be a few hundred dollars or a few thousand dollars. If you hold onto your vacant land and don’t do anything with it, you might pay double or triple what you did for the land in annual taxes and have nothing to show but the same piece of vacant land. 

Another potential annual fee is the property owner’s association fees. Suppose you purchased land in a community with an association. In that case, these fees might also be a few hundred or a few thousand dollars a year, depending on the type of community and the services they provide, and what amenities are available. Also, remember that public utility expansion or other special municipal projects could be added to your annual tax bill that may or may not improve your land directly.

Tax Benefits

Owning vacant land in Pennsylvania is an excellent investment asset but has fewer tax benefits than owning a single-family house or a commercial property. There is no depreciation to claim on your taxes, and vacant land does not usually qualify for any homestead exemption on your tax assessment.

Demands Higher Down Payment

The percentage of the amount to place a down payment on a building typically requires 15% – 25%; this percentage doesn’t apply to vacant land and can drastically change. Providing a loan for vacant property runs more risk for the bank or lender because the land isn’t ready to build or usually doesn’t have an exact value like an (After Rehab Value) on a home. In a specific area attempting to conduct comps may be difficult, considering most land has different dynamics and acreage. This factor prevents the lender from having a guarantee for the investment, directly resulting in the lender requiring a much higher down payment!

Cash Flow

Another hidden cost of owning vacant land is negative cash flow. You do not have a structure to rent out and collect monthly payments. Depending on the zoning of your vacant land, you might be able to recoup some of those annual tax fees by using your vacant lot as an extra rental space. You might want to consider purchasing property owner’s insurance if you do anything like this. If something happens to someone on your property while moving or occupying your vacant land, they might file a lawsuit against you. That would be a considerable cost for you.

There are many benefits of using your empty property for rental purposes. If you paid a little amount for the land and the tax responsibility is slim, you have the opportunity to rent the vacant land to individuals for storage. It’s recommended not to allow anyone to reside on the property but utilizing the ground to store vehicles or material might be appropriate and beneficial.

Property Maintenance

Owning vacant land can also become costly to maintain. If your property is in a municipality, they may require you to keep it mowed. If you have a lot of trees, they may need you to clean up the brush to guard against fires. If your vacant land isn’t in the best of areas, some dumping might occur on the property, turning it into a miniature landfill! This trash and garbage might cause you to have code violations and can be costly to have removed. There may also be unknown contaminants or toxic issues on this land that you are unaware of, but this might also be costly to clean up once discovered.

Market Conditions

Owning vacant land in Pennsylvania for too long can be a big mistake. If you buy your property while the market value is high and hold onto it for a long time, the deal might decrease more than you expect. Depending on your purchase price, it might cost even more than your annual taxes to hold onto it yearly. You might also be losing hundreds of dollars of market value. 

Options for Selling Land

Like any other real estate transaction, selling vacant land can be completed through three routes. The first method will be the traditional selling of the land on the market with a licensed agent. The realtor could potentially utilize their knowledge and experience to potentially price the land and adequately use their network to locate buyers. Using an agent also requires the seller to be responsible for paying six percent of the total sales price in agent commissions; this six percent does not include the closing costs, fees, and transfer tax. The standard way of selling property may also require land tests or zoning changes, which can be time-consuming and costly!

The second route will be listing the land for sale by the owner; this helps avoid the real estate commissions but leaves the property owner clueless about the land’s process and value. Many FSBO individuals face difficulty marketing the property to be sold, so after months pass with no success, the owner may need real estate services from a licensed agent.

The last but certainly not least way to sell your land will be to contact local investors by a google search to see if there is any interest in buying your land. Land of sale directly to an investor eliminates the unnecessary fees/commissions; it allows for a quick process, usually within twenty-eight days. Real estate investors will purchase your land as-is, requiring no inspections, land tests, or zoning changes. Our company suggests considering each route to sell your land to determine what best suits your selling needs. Weigh each method’s pros and cons and discuss things with a loved one to see their opinion and stance.

If it’s decided to sell your empty lot directly to a reputable real estate investor, contact Buying Property 215 to receive the highest cash offer on your land. We provide a stress-free quick land sale; we purchase property as-is in Pennsylvania, requiring no inspections or financial contingencies. We fund our projects, so there’s no need for a lender or a bank! Our small business requests no commissions, fees, or closing costs. The offer you receive is the amount you will walk with at closing. Buying Property 215 is a 5-star google reviewed company that the Better Business Bureau accredits with an A+ rating! Our family-owned company takes pride in our reputation and how we treat homeowners. We will go out of our way to ensure a satisfying property sale! Fill out this form to receive a no-obligation cash offer within the next half hour. {Buying Property 215, the best option to sell my house fast Philadelphia!}

Thank you for reading our blog post, “The Hidden Costs of Owning Vacant Land in Pennsylvania” be sure to check out some of our other blog posts! 

No matter your situation, if you own land in Pennsylvania, call [Buying Property 215] at [215-359-6090] to discuss the hidden costs of owning vacant land and what you can do about it!

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