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Vacant Land Is Costing You in America
Vacant land can be a valuable investment. However, holding on to vacant land can also cost you, maybe right away, maybe in the long run. There are annual taxes and potentially property owner’s association fees, not as many tax benefits, cash flow, property maintenance issues, and market conditions to consider. It’s essential to contemplate every aspect of owning vacant land before making any significant investment decisions! Call Buying Property 215 at [215-359-6090] to discuss how holding onto vacant land is costing you in America and the best ways how to generate wealth from real estate!
Annual Land Cost
Purchasing vacant land might not be as expensive as purchasing a house, but don’t forget the annual taxes! Depending on the location and zoning of your land, the taxes 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 for it 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, the services they provide, and what amenities are available. Also, remember that there might be public utility expansion or other special municipal projects that could be added to your annual tax bill that may or may not improve your land.
Annual expenses are not limited to taxes and fees; another cost to consider would be the yearly mortgage payments. The interest rate when purchasing land is typically double that of a conventional loan when buying a house due to more significant risk; on average, the interest rate is between five and six percent. If you have poor credit, expect a higher interest rate with more money required at the closing. It’s suggested to review every expense before purchasing land and ensure you have the funds available for this investment.
Owning vacant land 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 homestead exemption on your tax assessment.
Holding on to 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 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 to you.
Holding onto 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 once discovered, this might also be costly to clean up.
Possible Safety Hazard
Vacant properties present numerous health and safety hazards, from fires to crimes. A large percentage of house fires occur in vacant buildings, and these fires can be hazardous considering most of these buildings have issues with the overall structure. Another possible problem is that criminals utilize empty properties to stash weapons or drugs; these locations are perfect for criminals because they are out of sight and do not possess these individuals. These buildings can lead to further crimes considering these properties’ privacy and reputation. Vacant buildings affect the property owner, the neighbors, and the community. It’s important to properly seal these homes with plywood to prevent fires or trespassers from accessing the property.
Holding onto vacant land in America can be a big mistake. If you buy your property while the market value is high and hold onto it for too long, 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.
Investing in empty land is extremely risky; the value fluctuates more often than property. The current building within a half-mile directly affects the value of the vacant land or lot; once a new construction home is built and sold, it will influence the value of the land, similar to how a renovated home impacts the value of related property comps. There are indications of neighborhood growth or signs the area is heading in the wrong direction; this is an excellent way to determine whether it’s appropriate to buy or sell land. It takes time, knowledge, and experience to understand a community’s value indications fully.
Sell Vacant Land
Not every investor is prepared for the risk of investing in vacant land, and there are many ways a piece of land may cost you that most individuals will overlook. An ordinary expense will be the annual property tax; the total amount would vary depending on location. Unless you purchase the land with cash in the total amount, you will be required to acquire a mortgage. The property loan will consist of interest, roughly six percent depending on the buyer’s credit. There are hardly any tax benefits compared to owning a home, but the taxes are cheaper for land than a building.
Most landowners generate a negative cash flow unless they rent a portion of the property for storage or other purposes. Still, it’s essential to understand the zoning to prevent potential fines. Most vacant land requires regular maintenance; keep the grass cut, the tree’s trimmed, and remove all the trash. Every municipality will issue penalties if the upkeep of the property is not maintained to high standards. The value of your land may be modified depending on the recently sold properties nearby. Every couple of months, research recently sold properties to assess the current value and determine if it’s the most appropriate time to sell land.
If it’s time to sell land, contact “Buying Property 215” for the highest cash offer with a fast closing. Our family-owned company can close on your property within 21 days, offering a stress-free process. We will cover all closing costs; the seller will be responsible for no fees. We purchase land regardless of the circumstances and overall condition! The Better Business Bureau accredits our company with an A+ rating and 5-star google reviews!