By Bruce Cathcart
I always liked the bumper sticker that read “Real Estate, buy a lot!” The play on words gives the double meaning of both buying a lot of real estate and buying a parcel of land referred to as a vacant “lot”. Both ideas are good ones and looking back I wish that I had taken better advantage of both opportunities.
Owning a home may not be for everyone and even fewer individuals are emotionally or financially prepared to own a rental house or apartment units. But just about anyone has the ability and skill set required to purchase and own a vacant lot. And right now it might be a pretty good time to acquire one! Lot prices go up and down the same way home prices do and right now lots are bargain priced across the Coachella Valley and in the majority of areas in the U.S. Over the past 6 years due to the high number of foreclosures and the major decline in home prices, building activity (especially new home starts) has been extremely limited. With no demand from builders to buy lots their prices have fallen dramatically. So what are some of the things you need to know when purchasing a vacant lot?
If you are buying a vacant lot to eventually build your own home on or just to hold as a long term investment the advice here is the same… location, location, location. But you already knew that! Of course you want to make sure your lot is located in a good community and relatively close to all services including schools, hospitals, shopping etc. but once you have decided on a community, you will want to begin your research on the lot itself. Are all of the utilities readily available to the property? Is the water through a district or a private well? Is there public sewer in the street or are septic tanks used. And what are the charges to connect to sewer, power and water? A “finished” lot is one that has all of the utilities in place and is ready to be built upon, but you still will want to know the answer to all of these questions about the utilities. What is the current zoning on the property? The zoning is the local ordinance that sets forth the type of use that is acceptable on the lot. This can be residential, commercial, industrial etc. Is the lot subject to a Home Owners Association with special rules and regulations? Are there any CC&R’s (Conditions, Covenants, and Restrictions) on the lot? When purchasing a vacant lot it is very important to obtain a policy of Title Insurance that will, among other things, inform you of recorded HOA documents, CC&R’s, as well as any liens and easements. Is the lot in a flood zone or fire Hazard zone? Obtaining a Hazardous Zone Disclosure will answer these questions. Is a survey necessary to locate the exact boundaries of the lot? What are the annual real estate taxes? While this may seem like a lot of questions, your Realtor or the local listing Realtor will help guide you through the process and have all of these answers for you, just make sure to ask them the questions!
This week’s real estate tip: If you are considering purchasing a lot as a long term investment, do not limit yourself to shopping in your own back yard! Since your primary responsibility for lot ownership is paying the annual property taxes and making sure that the weeds don’t grow too tall you can own a lot just about anywhere. There are lot prices in rural California and especially out of state that can accommodate anyone’s budget and many sellers will even finance the sale!
Bruce Cathcart is the Broker/Co-Owner of La Quinta Palms Realty, “The Friendly Professionals” and can be reached by email at firstname.lastname@example.org or visit his website at www.laquintapalmsrealty.com.