The processes involved when buying commercial land as a real estate investor is never an easy decision to make. You have to understand that all investments have their ups and downs, the buying option is of the utmost importance in real estate.
Looking at the increase in global economic challenges starting from the high inflation, high interest rates, and the uncertainty of other investment opportunities, examples are the shares and bonds, which are opening more doors for real estate opportunities to put your investments in.
What is the idea of commercial real estate? This is the idea of buying real estate properties and assets that will yield more money over time.
Some people normally ask, if it is possible to buy commercial land and property without generating profit over a period of time. To able to get a good return on investment from buying commercial land and other real estate assets, certain factors ought to be in place.
This article will enlighten you more about the keys things to look out when buying lands for commercial real estate.
Before we proceed, let’s look at what commercial real estate is all about.
What is Commercial Real Esate?
This is a term used to describe a broad class of real estate assets, purchased with the intent to earn a profit either through rental income, capital gain or the both.
Lists of Commercial Real Estate
- Office Space
- Industrial
- Retail
- Multifamily rentals
In this article, we will discuss land types as a type of commercial real estate. All commercial real estate assets normally come along with land. When the land is vacant in the sense that nothing is in it, this can be group into three.
Brownfield
This is a vacant land that has become environmentally impaired with the passage of time and use.
This type of land are very affordable, the main reason is the cost involved in resolving the environment damges that may occur.
Greenfield or Agricultural Land
This type of land is use for agriculture purposes and the beauty about this land is that they are not expensive.
You can find them in rural areas.
Infill land
Infil land also known as use of land within a built-up area for further construction. Examples are military bases and parking lots.
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The Benefits of Land Ownership
John D. Rockefeller, ”The major fortunes in America have been made in land.” This simply means that buying commercial land is one of the best ways for getting a good Return or Investment (ROI).
The land encompasses all physical components, endowed by nature, to a piece of property the nature resourses, climate, fields, environment, forest, fields, and sources of water.
The land is a very valuable resource, but if it comes with other mineral resources such as precious stones, oil, and gas, it automatically increases in its value.
Having a commercial land has a lot of benefits in place for you, once the source is reliable. The ROI on these properties may increase, when purchased wisely.
This type of investment is suitable for investors who demand long-term investment returns.
Real estate market has revealed that land will continue to appreciate over time, because of its tangibility, usability and scarcity.
- The benefits of land ownership:
- It needs little or no maintenace/repair fees.
- There is little or no risk invloved
- The buy and hold strategy of land to sell or lease generates income for the owner
- This is normally affordable investment with long-term benefits
- Minimum property tax is involved
What Are The Major Factors To Consider When Buying a Commercial Land?
This is something you should never drop into at first sight. Before buying a commercial land you should do a careful research, planning, and reviews to make sure that you are getting a very perfect parcel to meet all your needs.
Below are the Major 7 Factors To Consider When Buying Commercial Land.
1). The Value of the Commercial Land Before Buying
The cost at which the land will command under normal circumstances is what you should focus on. Profits is the reward gotten for purchasing a commercial land.
The value from the commercial land must be equal to the effort and time you put into developing the land.
2). Accessibility
You should location into consideration when you want to buy a land in the United States of America. The reason is that commercial land that are easy to access will have a high rental value compared to the ones that are not accessible.
You need to ask yourself this questions.
- Will a parking lot be obtainable?
- How about the vehicles ingress and egress?
- Can the land be connected to other freeways?
3). Zoning
This allows local and international authorities to regulate and have control of land and property markets to regulate complementary uses. The zoning includes the sizes and height of the buildings, waste management, noise level and the rest.
4). No Restrictions
What you should avoid is buying a commercial land with restrictions. Some of the common restrictions are the property maintenace, the type of building wanted.
When this is in case the expections you ever need from the land might not come to pass.
5). Topography
As a land investor you must always seek the help of a topographical surveyors. They can give you a well detailed plan or picture of the land’s makeup in term of the slope of the land, floodplains, underground pipes and even soil quality.
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6). Check your budget
When buying a commercial land you must check your budget, this will determine the type of land thaat will be favorable for you.
You should never be in a hurry to make payment, instead you should settle for a while to check out your budget size, and if it is not up till your budget, this should not make you to break the bank.
7). Utilities
When you want to buy a commercial land, never assume everything to be in place. Make sure you check the presence of water, electricity, and phone/internet services and mosty expecially the drainage management to avoid erosion or lost of properties in the future before you make your payment.
Conclusion
The commercial lands is a profitable business everyone should invest into. The sweetest part of this investment is that it can never depreciate, but rather appreciate. What you need to grow your investment portfolio is having the knowledge of how the business works.
