Buying and selling land is not the same as flipping houses, but for the right investor it can definitely be a profitable undertaking. In some ways it’s much easier than buying and selling homes, but it can also be more difficult if you don’t know what you’re getting into. Provided you understand the potential pitfalls, however, you should be able to make a pretty penny buying and selling land. Here are a few common mistakes you’ll want to avoid in the process.
Overspending. This is a major problem for people that have never engaged in the process of buying and selling land for profit. And the only real way to avoid this mistake without losing your shirt in the process is to take your time, do your homework, and learn what makes land potentially profitable. Like buying a home, location is important. But you also need to pay attention to factors like construction and growth in an area, zoning, and prior land use. If you’re looking at a great deal and you discover that the land is cheap because it was formerly used as a petrochemical dump site, you might want to consider looking elsewhere.
Failing to prepare for holding. Whether you’re flipping houses or flipping land, one of the biggest mistakes you can make is assuming you’ll sell right away. And this is an even bigger problem with land because there’s not a lot you can do to improve it for resale. If you’re looking to sell a large tract for home building, you may install water, power, and septic, just for example. But if you’re just buying a lot here and a lot there, you probably won’t make any appreciable upgrades. So you need to prepare for the prospect of holding the land for a while until the value increases.
Lacking a backup plan. If you are relying on a speedy sale and it isn’t forthcoming, you need to have a backup plan in place to cover the interim. This could include any number of strategies, like leasing, renting, building, or selling to another investor. So long as you have a few exit strategies in mind you should be able to avoid complete financial ruin. After all, any type of property has the intrinsic value of a tangible asset. You just need to have several scenarios for unburdening yourself.
Ignoring rational fears. Nobody wants their life to be ruled by fear, but neither should you avoid your gut instincts. If you’re getting into a deal and you are racked with doubts and insecurities, or you’re putting your life savings and your financial future on the line to make it happen and it just doesn’t feel right, you need to take a step back. In some cases, the risk is just too great. If this is true you should take your time and wait for something a little safer to come along. On the other hand, you may simply be sweating over nothing; focusing on minute details that really won’t affect your ability to buy and sell property. Either way, don’t let your emotions make the call. Pay heed to fears that are rational while overcoming those that might stop you from making a lucrative investment.
Going it alone. You are probably aware of the fact that purchasing land is a little different than purchasing lots with homes on them. The market, the price range, and the potential for earnings are all different. As a result, you probably don’t want to go with your average real estate agent when it comes to making such purchases. But neither do you have to face a steep learning curve on your own. When you hire a reputable company like Lone Eagle Land Brokerage, Inc. to help you out, you can gain the knowledge and experience you lack and find the investment that’s right for you.