When it comes to valuing raw land, there is basically no “magic bullet” that could compel oneself to virtually reach the bar of 100% certainty about any property’s market value, specifically true for unimproved land.
However, there is practically always a way to get reasonably reassured of a “ballpark” figure on a property, albeit with raw land.
It can be pointed out that several factors act as pivotal for the investor before initiating the process of acquiring a land/property.
How can the property be classified?
What are the features and use of the land? What the land can be used for? Is it ideal for the building of a House? Office Building? Factory? Or is it suitable for farming and cultivation of the flora and fauna?
Make sure you grasp beforehand what you are up for and what you will be allowed to do with the property in accordance with the local zoning and planning requirements set by your Town/Community Council.
How many land listings are available on the market?
Is it a one-of-a-kind property listed or are there many other similar properties at hand on the market right now?
If you own a land that is situated in an ideal location in terms of view, accessibility, or resources readily available unlike any other area, that is most probably worth something!
Nonetheless, if your property is similar to others in a number of characteristics, it would be much harder to sell it at a premium price.
What are similar properties listed for in the vicinity?
Just believe for an instance that you are the owner of the property you are evaluating for acquisition.
If you list the property for sale TODAY, what are the chances and kind of “competition” you would be dealing with in the immediate surroundings?
In case you acquire the subject property for the the price you want, you’ll be able to re-list it, and tag a competitive price that is significantly higher than what you paid for, AND exceedingly lower than all other properties in the area. It is definitely a way to boost your revenue as a land flipper and yet it’s another key consideration before buying a parcel of land!
Desirability of the Property?
Adopt a “practical and sensible approach”.
What was your first impression upon seeing the property for the very first time? Anything eye-catching, appealing or even desirable? Be honest with yourself- was there anything truly mesmerising? Will it be an amazing idea to own it? Would it catch instantly anyone’s attention? Or is the imagery just plain, barren with no invigorating sensation?
So going through the process of evaluating a property from a certain point of view requires some particular thought!
What are the holding costs of the Property in question?
Suppose you buy a parcel of land and you cannot re-sell it promptly/immediately? What if you are to hang onto it for a couple of months, 6 months or even a year? If you are forced to hang onto the property for longer how much will it cost you? (For instance- property taxes, association fees, assessments, etc…) Is it worth such a risk? Is it affordable?
Road accessibility to the Property?
Upon dealing with a vacant land, a huge implication is de facto the accessibility to the property!
It is always important to verify the road access or a sort of legal easement in order for you to be able to sell it to a future buyer. Believe me, a vacant lot with no access to it is a serious headache and you might end up in an unwanted situation!
What is the size, shape & dimensions of the property?
Think about how can this property be advantageously exploited some day. Is the parcel big and sufficient enough? Does it have an odd shape? Is it located next to anything that would significantly decrease its desirability or even its value? Take note of any red flags that are associated and you might run into. These can be serious issues that will influence the property’s value.
How far/close is the property to the local amenities?
Consider what kinds of amenities or local attractions will be available to the owner of this property. Will they have a grocery store across the street or will they have to drive for long hours to get there? Will you be able to market the property’s location as a good thing?
This one is closely related to the property’s desirability and its most efficient use. If the property’s most obvious use is to build a single-family house, park a mobile home or hold any kind of residence, then this factor becomes even more important to consider.
What do the adjoining properties look like?
The properties next door can have some major impacts for the value and “sale-ability” of a parcel of land.
Most people care a great deal about who their neighbours are, so it’s fair to have a good idea of how the surrounding properties could impact the desirability of your property. If the adjoining properties have any obvious issues that are beyond your control, you’ll want to think carefully about what this means for the property’s value.
Indeed, there are several factors to take into consideration before considering to invest into any property- notably raw land. It would definitely be wise to evaluate them thoroughly!
Property is a good business. Give it a go
Have a very nice day ahead..!
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