What you should consider when buying land for development
What you need to know:
Eric Mugerwa, a surveyor, says on the surface, it seems simple but there is a lot one can do with idle land
Unoccupied land is one of the most overlooked and misunderstood real estate investments in the world because many real estate investors completely fail to recognise the larger benefits that come with owning land in its raw form.
Land value
Eric Mugerwa, a surveyor, says on the surface, it seems simple but there is a lot one can do with idle land.
“It is just a matter of knowing what to watch out for and under what circumstances you should re-adjust your offer price,” Mugerwa says.
Zoning on the property
Before going out to buy land for a project, Mugerwa says it is important for the developer to understand what a property can be used for, and what the best use of the property is.
“You can hire experts from the local planning and zoning department, to give you the answer to this question in a matter of seconds. Once you know the zoning classification such as residential, mixed-use, commercial, industrial, and agricultural ask whether the type of property you want to invest in, would be allowed under each of these particular zoning classifications.
“They may even give you investment ideas you had not thought of,” Mugerwa says.
Annual tax obligation
Mugerwa says if you intend to hold onto a property for any period of time, beware of a high tax bill relative to the actual value of the property itself. Also, there are areas that impose high taxes for certain kinds of property. Mugerwa says: “To save yourself from unnecessary expenses, avoid investing in projects that attract high taxes, in comparison to the property’s actual value.”
He adds that you should know about the available public utilities in your area of interest such as water, sewer, electric, gas, phone and this can also give you an idea on what to put in place.
“If a property does not have access to one or more of these staples of reasonable living, the property may not be considered buildable.
After all, who would want to build a house where they cannot flush the toilet or get access to clean water,” Mugerwa says.
He adds that if a property is not buildable, you will lose a massive portion of the property’s usability, marketability and value.
Since most people buy land with the intent building on it, you will definitely want to be aware of anything that could become a hindrance to that objective.
Required building setbacks
Ismail Mulindwa, a property manager, says you should know the exact dimensions of the plot of land you are evaluating with the help of the local zoning department.
“You should ask the agents what the selected building delays are for the property in question. These requirements are common, and are imposed as a way of giving order to the buildings in any given area,” Mulindwa says.
Proximity to water bodies
He adds that in some parts of the country, plots of land are vacant because they are literally under water. In other areas, there may be properties near bodies of water that are prone to flooding.
“In either case, if a property is at risk of flooding you have to know about this before you buy because when a property is in a flood zone, it can be extremely expensive to insure,” Mulindwa says.
He adds that land located near a body of water can be extremely valuable, but this close proximity can also create a number of potential issues so be sure you understand the ramifications of your particular location.
Key features
Does the property have access to a municipality water supply?
There are a lot of properties that do not have access to municipal services but this is not a necessarily a problem, but it means you have to drill a well in order to access a clean water source.
Are there wetlands on the property?
Wetlands can present tricky situations for land owners. This is why it is important to identify the presence of wetlands before closing the deal.
