Look Before You Leap
September 24, 2010
When you're buying land, it's easy to make a mistake.
A few years ago, I created a list of the top 10 land-purchasing mistakes, hoping to provide a "cheat sheet" for buyers. Here are a few tips:
DON'T BUY TOO MUCH
I have seen folks buy 200 acres they couldn't afford, just because they were able to borrow the money. Instead, they should have paid cash for the 20 acres they could afford. If you are buying property for recreational uses, it is pretty hard to enjoy that land if it's creating a financial burden for you.
Remember that while land is a great investment, it is not as easy to sell as a mutual fund. Selling property can take time, and if you encounter a financial crisis or cash-flow shortage, you may not be able to unload your land quickly enough. So don't overextend yourself financially to buy recreational property. You'll enjoy your little place in the country a lot more if you're not worrying about how you're going to pay for it.
HAVE AN EXIT STRATEGY
I know it is the tract of your dreams, and I know you are going to keep it forever, but the fact of the matter is, none of us knows what tomorrow will bring. So if you are buying land, you better have a plan to sell it, even if you plan to keep it forever.In fact, your exit strategy should guide your purchase. That way you can focus not only on why a particular tract is valuable to you, but also why it might be valuable to someone else. How would a potential buyer view your property? What would enhance its marketability? Be smart. Have a plan to sell your land, even if you never plan to sell it.
CHECK THE NEIGHBORS
Make sure you know the neighbors and the neighborhood before you buy your dream tract. Noisy neighbors (like a rock quarry, saw mill or railroad tracks), smelly neighbors (like poultry or hog farms), or ugly neighbors (like landfills or industrial parks) can spoil the enjoyment of your country getaway. Look around the area and ask questions, because bad neighbors and bad neighborhoods may be with you for a long, long time.
DON'T BUY A PROBLEM
I love a deal. I love spending as little as I can on a tract of land. But I also know that if you are determined to get the most acreage for your budget, you are likely to make a mistake.
The cheapest tract is not always the best value. Cheap land is cheap for a reason; it's ugly, land-locked, cut-over, swampy, or has some other "warts" on it. For the most part, tracts are priced at what they are worth, so don't become obsessed with the lowest price per acre, or you might wind up getting a tract that you don't really want.
We have all heard it before. "There is $1,000 per acre of timber out there." "The sewer line is coming." "You can't smell those chicken farms from here." "The roads on this tract are always accessible." Be aware that sellers, agents, heirs and neighbors all have a dog in this fight, and they don't necessarily have your best interest at heart. Plus, many people simply pass along information that they have been told by someone else.
So get an expert opinion of timber value. Ask for written verification of county utilities and zoning. Stand downwind of the chicken houses and sniff for yourself.
You can get my complete list of Land-Buying Mistakes plus the Top Ten Myths/Truths of Land Ownership at www.greenwoodproject.com.
ABOUT THE AUTHORDon Webb is the author of "Maximizing The Land Ownership Experience" and president of Greenwood Land Company, which provides land acquisition and consulting services. Contact him at (706) 575-4178 or go online to www.greenwoodproject.com.