Buying a piece of land for sale may seem like a great investment and, in some cases, it can be. Many people have bought land at bargain prices and been rewarded hundreds-fold of excavators looking to unearth minerals or developers ready to start a new subdivision. But should you sell your land?
There is a common saying that buying undeveloped land is the transfer of property from one fool to another. Therefore, if you have thought to yourself “should I sell my land?”, the following circumstances may be strong indicators that it is time to sell.
4 Reasons You Should Sell Your Land
1. The Tax Bill is Too High
Property taxes are a cost of homeownership that cannot be avoided, and in most states, the property tax rate is anywhere from 1-4% of the home’s appraised value.
For a piece of land you own but are not actively living on, anything that falls above this range is unacceptable and you should sell your land if possible. Ideally, the tax rate on your uninhabited land will be closer to 1%.
If you have a piece of land that you are holding onto year after year but are not using or actively developing, it is time to consider whether to sell your land, as the tax bill is likely to add up much faster than any appreciation in the undeveloped property’s value.
2. The Land is Not What You Envisioned
With the proliferation of the Internet and smart technology, more and more properties are being sold virtually. While this is convenient and can potentially reduce realty and buying/selling costs, some issues may rear their ugly heads a short while into land ownership.
For example, a beautiful lot as seen on the Internet may present some challenges for development. If the topography is unsuitable for construction and/or the area is a cesspool for natural disasters, it is best not to sink additional resources into improving the land. This is especially true if you plan on building with traditional wood-frame house construction, which would leave your prospective home vulnerable to fire, tornado, and/or earthquake damage.
3. You Don’t Really Understand the Zoning
Investment 101 preaches not to buy anything that you do not understand. However, some pieces of land are so cheap compared to their perceived value that buyers are quick to sign on the dotted line without fully considering how zoning restrictions may limit land use.
“There are many beautiful pieces of land on wildlife preserves that cannot be developed, cities that prohibit national chains of retailers, and vast expanses of seemingly barren terrain that is designated farmland.” – Corey Tyner, District of Columbia Land Buyer.
Therefore, if the land you own is zoned for something other than what you intended, it is best to try and sell your land to someone who can use it under the zoning guidelines.
4. Utility Access is Limited or Unattainable
Anyone who has seen the Hollywood classic Chinatown understands the importance of water, as those who owned water rights in southern California in the early 20th century became rich as running water turned vast expanses of desert into the thriving metropolis known as Los Angeles.
If you are sitting on your own piece of desert, but the logistics of getting utilities on your land property like water, electricity, Internet, and cell phone reception to it are unfeasible for the foreseeable future, then it may be time to sell your land, as development efforts will be slow to take hold.
5. Construction Falls Behind Schedule
Very few people buy land for the sake of buying land, as the aforementioned tax implications make it impractical to continually pay tax on something that is not being used or making money.
As such, most people purchase land with an imminent construction plan already in place. If the construction gets delayed indefinitely, or delayed to the point where the cost of waiting becomes untenable, then it is time to sell your land and move on to the next investment opportunity.