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  • Writer's pictureBrett Campbell

How to avoid disaster when searching for your American Dream (property).



I've learned through experience that the key to successful land investments lies in thorough evaluation and due diligence. When considering raw land for development or investment purposes, there are several critical factors to assess. In this blog post, we'll delve into the essential steps and processes involved in evaluating raw land, including considerations such as location, road access, utilities, zoning, permitted uses, and conducting proper due diligence.


Location:

The first step in evaluating raw land is assessing its location. Location plays a vital role in the potential value and marketability of the land. Consider proximity to urban centers, desirable neighborhoods, transportation infrastructure, and economic growth in the region. A strategic location can significantly impact the land's future development potential and its value over time.


Road Access:

Access to the land is another crucial aspect to evaluate. Check if the property has direct road access or if it requires easements or new road construction. Adequate road infrastructure is essential for future development and can impact transportation costs, property value, and potential uses.


Utilities:

Availability of utilities such as water, electricity, gas, and sewage systems is crucial for land development. Evaluate the proximity of utility lines to the property and determine the feasibility and costs associated with connecting the land to these services. Access to utilities can significantly impact the land's development potential and its overall value.


Zoning:

Understanding the zoning regulations and restrictions imposed on the land is essential. Zoning ordinances dictate how the land can be used and what types of structures can be built. Research the current zoning designation and verify if it aligns with your intended use for the land. Explore any potential future zoning changes that may impact the property's value or permitted uses.


Permitted Uses:

Determine the range of permitted uses for the land based on the current zoning regulations. It's important to align your objectives with the property's allowed uses. Consider factors such as residential, commercial, industrial, or agricultural uses, and evaluate whether they are compatible with your investment goals and the market demand in the area.


Due Diligence Process:

Proper due diligence is crucial when evaluating raw land. Here are some key aspects to consider during this process:


a) HOAs and Restrictive Covenants:

Investigate if the property is subject to any Homeowners' Associations (HOAs) or restrictive covenants. These can impose additional restrictions on land use and development, impacting your plans and potential returns. Review the HOA agreements and restrictions to ensure they align with your objectives.


b) Deed Restrictions:

Examine the deed to identify any specific restrictions or easements attached to the property. These may include limitations on building height, setbacks, or usage restrictions that could impact your development plans.


c) Perk Tests:

Perform soil percolation tests, also known as perk tests, to assess the land's ability to support a septic system. This is crucial if the property lacks access to a public sewage system. Understanding the soil's absorption capacity helps determine the feasibility and costs of installing a septic system.


d) Environmental Analysis:

Conduct an environmental analysis to identify any potential environmental hazards or concerns associated with the land. This includes assessing soil quality, potential contamination, and the presence of hazardous materials. Compliance with environmental regulations is essential to avoid legal and financial liabilities.


e) Wetland Considerations:

Evaluate the presence of wetlands on the property, as they may be subject to regulations and restrictions. Wetlands play a vital role in ecological balance and may be protected by local, state, or federal laws. Determine the extent of wetland areas and any associated limitations on land use.


f) Flood Zone Determination:

Assess whether the land is located in a flood zone. Flood zones can significantly impact development plans, insurance costs, and the overall marketability of the property. Obtain flood zone maps and consult with local authorities or experts to determine the flood risk level.


Conclusion:

Evaluating raw land requires a comprehensive approach to assess location, road access, utilities, zoning, and permitted uses. Additionally, conducting proper due diligence is crucial to uncover any potential restrictions, environmental concerns, or limitations that may affect the land's development potential and overall value. By following these steps and processes, you can make more informed land investment decisions.

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