Friends, buying any kind of property is daunting. Unless you've done it many times, we are all very much new to the process. Take me for example. As I mentioned before, we bought our house in early 2021, and even during the hottest and most aggressive housing market since the 2008 recession, my husband and I were surprised to have had quite the easy process. We didn't pay anything over asking, we were the first offer and the seller accepted, and he even completed some work on the house before closing, which was unheard of for that year.
Enter: buying land. Oh, it's just trees, acreage, and maybe a trail? How hard can it be?
I cannot emphasize enough how much I did not know. Now that we are *currently* in the process of closing on our own slice of Up North, MI, (eep!), I can help!
Here are 5 tips to get you started when looking for and buying land:
LOCATION. LOCATION. LOCATION.
You hear it a lot, but nothing is more important than where the property is located. What attractions are around? Is it a great vacation area? Would YOU want to go there? Start by pinpointing an area that you love, or one that you think will bring guests. It doesn't have to be a huge hotspot for tourism. This is a common misconception. Just because places like New York, Disney, or the Florida Keys drive large amounts of vacation rental traffic doesn't mean that it's the best investment for your short-term rental.
Think about remote area vacations. Having the chance to unwind, unplug, and hit some great local trails is a luxury that so many forget about. Many places are available to rent in the mountains, on small and large lakes, in forests, and out on farms. The more remote the area, the more land available.
Decide what the land will be used for.
Are you planning on building a house? A cabin? A tiny home? Are you allowing recreation, hunting, or a sport requiring a field or course? Having a plan before starting your search can help outline the type and size of the plot you're looking for.
Do your research on comps.
You know how realtors will research comparable properties for the house or apartment you're buying in the area? The same goes for when you buy land. Search for recently sold properties similar to yours (acreage size, location, etc.) Before putting in an offer, make sure the pricing is in line with recently sold and nearby properties that are similar to yours.
Check into local municipalities and city regulations to see if they even allow short-term rentals. This goes for building and zoning as well. If you want to build multiple structures on some acreage, make sure that the zoning allows for more than one structure.
Get a land appraisal.
This might be the most important tip in this list. Whether you are working with a lender or not (lenders usually require land appraisals), get an appraiser out there to assess the value of the land. They will look at a number of things, including but not limited to: the size of the property, the location, the most recent survey done, if the location was hard to get to, what utilities and infrastructures are available nearby, and what is the makeup of the land, i.e. trees, marsh, waterfront, etc. All of these affect the value, and therefore, the price, of the property. (Sneak peek into my current experience: our piece of land appraised for 15k LESS than the asking price! I truly believe this was due to one side being inaccessible from a local owner putting his own locked gate on a public road. And you better believe my first order of business will be addressing that! More on this process and some news in my next post!)
I'll say it again. Get an appraisal. Unless you have personally walked and surveyed this land yourself, you might be missing some key information.
Closing time!
If you're not working with a lender, make sure your funds are available, that you have enough factored in for closing costs, and that you've had a legal or real estate professional review your documents.
If you are working with a lender, they will have already gotten you approved for the amount owed, but you are still responsible for the down payment, any extra you offered to pay, and the closing costs.
Remember, you don't get the keys once you've closed on the property like you would with a house. Do something fun to commemorate this achievement! Maybe carve your initials into a tree on the land, take a fun photo of you "breaking ground," or push ahead with your next steps. Whatever you do, this is a great accomplishment and a large step in your short-term rental goals!
As I mentioned above, we are actually in the process of finishing up our own land-buying process. Each of these tips has been essential for making sure I was on track and doing things correctly.
I can't wait to share my personal experience with you, which will be posted within the next week!
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