When you have a lot of extra cash on hand, one of the wisest things that you can do is invest that money in something. Some choose to fund businesses because, as they say, it’s a lot better than just letting the money sit in the bank with very minimal interest.
There are others who invest in property, land more specifically. They choose land because unlike the value of most properties, land’s value will most likely increase over time. Hence, a much more significant return of investment is probable.
However, just because buying land is an arguably good move doesn’t mean that you can just do it without proper planning. It involves money, so it’s still very important that you subject your land-buying decision to a thorough thought process. We present in this article some of the questions that you should ask yourself before a sound decision is reached.
What will I use this land for?
Anything expensive that you buy will increase the value of your assets. However, it freezes your money. So, on record you could be someone whose value is $50,000, but $25,000 of that is not immediately dispensable because it is just the monetized value of the land that you own. Although there is a chance of future recovery, buying a parcel of land is still an expense, and a big one at that. Because of this, there is a need for you to be clear with what you want to do with it. Do you want it to earn extra income as you wait for its value to appreciate? Or does its value lie in the fact that you get to live on it?
Aside from maximizing your money’s value, knowing what the land is for is very important because the paperwork for every path is quite different. You secure different documents for a commercial property. You also have a different set of papers for a residential one. And then there comes the conversation on taxes. Of course, residential and commercial taxes differ significantly.
What surrounds the property?
An ‘easement’ is a legal concept that pertains to a right to use a property that is given to anyone other than the owner. Easements are provided, for example, to people whose properties are found so far inland that they have to cross other people’s properties just to get there. There are different types of easements, and the folks at Gagnon, Peacock & Vereeke will be better able to talk about them in detail. It is important for you to know if there are easement agreements attached to the property that you are eyeing. You see, some easements diminish the value of a property, such as when a part of it is used by someone else to make way for water lines or electric cables. In fact, you can legally go after your land’s seller if they fail to disclose at the time of the purchase the details about easement agreements that the property is involved in.
Asking the right questions, even just to yourself, is an important skill especially when you have to make very important (and expensive) decisions. Oftentimes, the devil is in the details, so you can easily get into trouble if you just gloss over some elements for the sake of saving time or keeping stress away. Buying land is serious business, so the decision to buy or not must be put under serious scrutiny; if it requires a little bit of time and stress, then so be it.