Land investments offer investors a variety of opportunities. It is especially true in Colorado, where the state’s popularity has surged.
However, many prospective buyers must realize that owning land requires much more than finding a home in the correct location. They need to know how to conduct due diligence properly, depending on their plans for the property.
One of the most important aspects of a land purchase contract is due diligence. It involves examining the transaction contract, existing documentation, and the physical state of the property. It ensures the property you purchase matches what is on the ground and can help protect your investment.
Part of this diligence is to check the property’s zoning regulations to see the maximum allowed building size and whether alternative-style homes, like manufactured, modular, or mobile ones, are allowed. Some zoning regulations may have other restrictions, such as requiring a soil test or specific infrastructure improvements. If you’re buying property for a new home from Frontier Log Homes, then you don’t want to find out you’ve bought property that’s zoned for something else.
A land use attorney is an excellent resource for examining these issues during the due diligence. They can also explain how a local government establishes rules and zoning requirements for their area. For example, they can define who has the right to protest an application for a zoning change and what limits are placed on these changes.
Owning a piece of land in Colorado is a dream for many. It is a fantastic way to construct the house of your dreams in the ideal location. However, owning a home requires a lot of work. With the prices of homes skyrocketing, more people are choosing to build on a plot of land.
This property typically has a much higher tax rate than a home built on an existing foundation. Before purchasing the land, a professional inspector should examine it. The inspector should ensure the land has access to water and sewage.
Another thing to examine is the road to the land. Does it have a solid surface you can navigate with a regular car, or is it unpassable in the winter? It would be best if you also asked who owns the mineral rights to the property. It could be a huge problem later on.
The land is a desirable investment for many who wish to build their dream home, create an outdoor recreational destination, or launch an agricultural venture. However, investors often need to notice or understand the nuanced details of a land purchase.
One example is the availability of public water access. If you plan on building a home on your property, it’s essential to know whether municipal water hookups are nearby or whether you’ll need to drill for a well.
Another potential issue is the existence of existing easements. These restrictions can prevent new construction from occurring or may impose a significant burden on the property’s value.
To help minimize these issues, a land buyer should perform lease and contract due diligence. This process involves requesting all existing property leases and contracts for review to identify any financial liabilities. It also consists of reviewing the property’s physical condition to assess if it will require significant capital expenditures soon. This hardly covers the list all the legal issues than can arise, so please touch base with your title companies, real estate attorneys and otherwise if you run into one of these many situations. Try to head it off at the pass if you can.
Whether you want to buy land as an investment or to build a new home, there are many different options for financing it. Depending on your short- or long-term goals, these options can vary significantly regarding their risks and benefits.
A land loan can finance vast acreages of raw or undeveloped property. It is similar to a traditional residential mortgage, but there are often more limitations on its uses and higher interest rates. A local bank or credit union will likely offer this type of loan.
Physical due diligence is a critical step in the land purchasing process. It includes examining the existing documents and physical state of the property, identifying discrepancies between them, and correcting any issues before closing the transaction. The best way to ensure you’re conducting this research effectively is to create a checklist and work with an experienced real estate broker. It will help you understand the nuanced processes in a real estate transaction and make a well-informed decision about one of your most significant investments.