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How can you maximize returns on vacant land?

On Behalf of | Apr 9, 2021 | Real Estate & Development

If you are an investor who is interested in buying land for commercial development, there are a few things that you need to consider. Most commercial buyers want to be able to make an income off of the land. According to U.S. News, you can maximize returns when practicing caution and following a few tips.

The following are three tips for commercial land development.

Use the land pre-development

You should not sit on land and let it decrease in value. Before you develop the land, you can still utilize it to produce income. For example, you could choose to post billboards for passive income or rent self-storage in the meantime.

Find a high-growth location

If you want to develop land, it makes sense to buy in an area that sees high growth. Most land developers want to buy land within 15 to 30 miles of an urban growth center. Market analysis can help you target the right demographics and ensure that you are developing land that current and future residents will utilize.

Most do not want to buy land when it is at the top of the market. When you do this, you have low returns when you do sell the land.

Obtain the right entitlements

If you entitle land and do not develop it, you can still make a big return. To buy land for commercial use, you need to know whether it is ready for development. You may need to have your property zoned, subdivided or permitted for contractors. If you do not have the right entitlements, your land may be worthless.