7 Questions You MUST Ask Yourself Before Buying Land
Real estate is a personal decision, and before making a purchase, you should ask yourself why you are buying real estate in the first place. Great answers come from great questions, so we’ve put together a list of seven questions we feel every buyer should ask themselves before purchasing land.
1. What am I going to use it for?
This may seem like an obvious question. After all, why purchase something you don’t intend to use? It’s hard to pass up a good deal and it can be enticing to buy a property without a purpose in mind. But, before you buy, ask yourself what you intend to use the property for.
From personal to business, real estate can be used for many things. Knowing what you’re going to use the property for makes a big difference in determining if this property will work for you.
If it’s for personal use there may be certain features you’re looking for that will fit your needs. If it’s for business use, you’re going to want to make sure it’s in a good area where your business can get the kind of customer traffic it needs to be successful.
A drive-thru coffee shop probably wouldn’t thrive in an area where the most frequent visitors are raccoons. On the other hand, your ideal living situation could be where you get away from the noise and traffic of a city. Always go into any significant purchase with a plan.
2. Who is it for? Just me, or my friends and family?
If you are purchasing land just for yourself, then your decision will be fairly easy to make, especially if you know what your purpose with the property is. However, if you’re purchasing with friends or family, that decision becomes more complicated because there are more opinions and preferences.
Knowing who the property is for and who is going to be spending most of their time there is important. If you’re buying the property for your own getaway it will be much different than finding a new place for your mother-in-law.
3. What will I do right when I get it?
“I got the property!”
It’s a great feeling when everything goes your way and you are able to get what you were hoping and wishing for. Now what? Do you know the next steps to take after you make the commitment to purchase real estate? Having a plan for what to do and knowing the first things you should do after a major purchase is important.
4. How am I going to pay for it?
This is one of the most important questions that you need to ask yourself before any major purchase. The last thing you want to do is to regret the purchase, which is what will happen if your purchase is out of your price range and becomes a burden financially. So, before you move forward with signing the paperwork, or even making the call to get the paperwork started, have a one-on-one meeting with your finances and see if this is going to work for both of you.
If you aren’t totally confident in making this kind of commitment yourself, ask a trusted financial advisor to help you figure out if this purchase is going to work for you.
Make a plan and figure out how it will work, then take the time to think about it and make sure this is a financial commitment you’re comfortable making. Major financial commitments stay with you so take the time to make sure you feel right about it before moving forward.
5. Is this the right property for me?
Not every property is right for every person. You’re going to want to look at more than just the land to see if this is right for you. Do you like the area the property is in? Is it too populated or too sparse? Do you like the climate, the weather, the elevation? Do you prefer dryer desert air or a humid climate? Are there concentrations of insects or animal life in the area you prefer not to live with like snakes, cockroaches, mosquitos, etc? Do you have health conditions that may be affected by the area like allergies or asthma? You want to make sure this is an area you’re going to be happy with and happy in, especially when using it as your permanent residence.
6. Does it fit my financial objectives?
Knowing what you’re going to use the property for will help determine if this purchase will fit with your financial objectives. If it’s for personal use you’ll want to make sure that this is within your budget and isn’t going to cause financial strain for you or your family. If you aren’t sure what your financial objectives are, now is a great time to figure that out before making a commitment.
If you’re purchasing for business, it’s important to analyze the property in regards to your business financial objectives. Looking at the long term business plan and financial goals will help you see if this property fits in with your other business objectives including increasing revenue and increasing your profit margins. If the purchase isn’t going to fit with your business, now is the time to know that.
7. What are my goals with buying this land?
Having a goal in mind is a great road map to help you achieve what you want. It’s the same for purchasing real estate. When buying land you need to keep the end goal in mind. There are many options you can take with a real estate purchase and knowing which option you want to pursue before you buy is always best.
Buy and Hold – If you plan to purchase the property and live on it or run your business then you’re going to have specific things you need. When searching, make sure to keep those in mind and make sure the property you purchase has what you need to be happy there.
Buy and Resell – Not all properties are bought and kept. There are many people interested in buying and “flipping” or re-selling a property after making improvements to it, or even just reselling when they’re ready to move on. If this is what you’re interested in doing you’ll want to make sure the property you choose is going to be worth the time, energy and financial investment you’ll be putting into it. You’ll also want to look at the quality of the land and the surrounding area to make sure this will be possible to resell when you’re ready.
Buy, Develop and Live In – This is more of a commitment in the real estate arena as this type of purchase requires a financial, time and resource commitment. When buying raw land that will need to be developed it takes a lot of time and commitment to making this property into everything you desire. Having that goal in mind and knowing that it’s going to take time to see your dream come true will help you keep the proper perspective as the land is cleared and developed and as you see your dream home become your reality.
Buy, Develop and Sell – This is another big commitment of time and finances. When buying a property you plan to develop and then sell, you’ll want to be aware of the real estate market and know what is going to sell. Investing your time and resources to develop land and build with someone else in mind isn’t always easy. If you have a vision of what will sell and start with that end objective in mind it will help you make better investment choices to ensure that you can sell the property after development.
In the end, it’s always good to check your gut. You seldom go wrong when following your intuition. We hope these questions help you on your land buying journey and we’d love to hear what other questions you come up with for yourself.
