Investing in land has become an increasingly common way of investing. And in order to be profitable, it is necessary to research everything important in advance especially if it is about (to you) still unknown markets.

Each country or city has its own regulations and laws that need to be respected, both usually and in this case. We’ve created a guide for you that can point you in the right direction, how to anticipate problems, and ultimately, help you make a cost-effective decision.

This guide can only help you – the final decision is yours.

1. What are the Zoning and Land Use Regulations?

To avoid headaches and problems, it is best to start with zoning and legal regulations for land use. These regulations determine what and where may be built and for what specific land may be used.

Let’s take, for example, that you want to build a commercial building. Before buying land, research where you can build such a building, how tall that building can be, and how many units it can have.

If you impulsively buy land that is not suitable for your idea (in this case, residential or agricultural), your project will fail and you will not be able to get the necessary permits. Go to the city offices and ask there. Also, ask the experts so that you can proceed with further planning with a calm head.

2. What Infrastructure and Utilities are Available?

In an ideal world, every plot of land should have access to public roads and utility connections (electricity, water, sewage, gas). But we don’t live in an ideal world. The lack of infrastructure and utilities can significantly affect the cost of investment.

In case you have to build access roads or bring in utilities, research how much accessibility there is and how much of an undertaking it is. Pay special attention to whether the land is isolated or remote. If it is in the interest of the city that that part of the city starts to develop and expand, you can try to negotiate with them because it is profitable for everyone in the long run.

Research has shown that for land buyers in Texas, the costs of building infrastructure and utilities can vary not only within a city but also within each individual county. The prices will also be determined by labor costs, material availability, and transport and they’ll also be affected by city regulations/permits.

So in Dallas, a lane mile of road will cost about 2 million (USD); in Houston, the same will cost approx. 2.2 million, while San Antonio will cost around 1.8 million (USD).

The same goes for Water and Sewer systems, the electrical grid, telecom infrastructure, and natural gas pipelines.

This just goes to show how impactful infrastructure and utilities are in terms of land value. Although these things often get taken for granted, they can quickly prove to be a massive expense.

3. Are There Any Environmental or Topographical Concerns?

These are things that you cannot influence (at least not directly), but you can distance yourself from them in time or try to create a project so that they don’t cause you problems. We have to say which ones, of course. Flood areas, erosion and soil quality, or the natural habitats of some animals.

You wanted to build an underground garage for your offices – you can’t because it’s a flood zone. No, you can (if the zoning allows you to do so). But it increases your costs because you have to take extra measures and take care of the drainage systems and the stability of the structure.

Here is the best to consult with geotechnical experts because they understand the demanding terrain. If you are already aware of potential concerns, you will prepare in advance and make sure that they are minimized or fully remedied.

4. What is the History and Status of the Land Title?

Ownership is perhaps the most important step in buying and selling real estate. Verify the current status in the title deed, but be sure to comb through the history as well. If anything is wrong with the title or there are liens, easements or unresolved disputes, it can complicate your land purchase.

The owner must have full rights and ownership of the land or all co-owners must agree to the sale. The title deed must be accurate and true to its actual state- full stop. Without it, you don’t even start negotiations. It would certainly be wise to get a legal advisor if you have any doubts or potential problems so they don’t arise later.

5. What are Long-Term Market Trends in the Area?

And now some research work. Study long-term market trends, population growth, demand in the area, economic (dis)opportunities, local government plans… All these can be very good indicators of whether it is worth investing in a certain area and, if so, what the long-term profitability is.

Research (done by others for you this time) has shown that land prices within 1-3 miles of new infrastructure have increased by an average of 12-18% within 5 years of completion.

Again, an example – buyers of land in areas that have an influx of residents can expect to benefit because the demand for both real estate and jobs will increase.

Conclusion

Location, location and location. However, this saying is not without meaning. Before making a decision, go through all the important steps, study the laws, consult with experts and think carefully about your investment. A little research before embarking on the project yourself, can save you a lot of nerves and money later.

Follow the trends in the market, but make your own decisions about your investments.