Land story

For many, raw land is great investment property and is generally considered a safe place to park money. Careful research affords the opportunity of avoiding pricing swings that tend to be associated with developed properties. However, factors beyond the control of even the most savvy can present unforeseen long term problems for those venturing into the arena of property investment buying.

While most will agree of risk involved in any real estate transaction, many believe the benefits associated with new land development far outweigh those risks and consider it to be one of the better investment choices available in the real estate market.

Getting in on pre-development prices of a new development can represent substantial returns on an investment. Among the pluses of the latest in hot land properties is the fact that the investor often times has the pick of choice properties. In the Texas hill country, for example, hilltop homesites are highly coveted. While there are many hilltops, there are few developed and fewer still that offer the truly amazing views. Homework, good fortune, and good luck can present the potential buyer with incredible opportunities.

Most of these type of investments come with the attached strings of dealing with a land development company. Bring on the risk factor.

Make no mistake that the sales manager is not interested in anything but his investment. In Texas, for instance, a sales agent or sales manager of a land development project is not required to carry a real estate license. In other words, they can wreak havoc on any project they so choose.

If his/her outlook on life is skewed by greed, rest assured that your financial risk will be greatly increased. The developer will grant variances to his sales manager that only benefit the two of them. Selling the development is the name of the game. If one chooses the unscrupulous route, there are many ways to participate in this activity.

Until an HOA is formed, the wise investor will keep a camera close at hand, documenting various issues that will most certainly arise. You are responsible for protecting your investment to the best of your abilities. HOA association fees can become a financial burden if the developer tries passing off repair and upkeep expenses that are the result of poor workmanship during the development phase. Pay close attention to road surface quality and drainage issues.

Will the development allow horses? Some developments in the Texas hill country allow such endeavors, regardless of the fact that five acres of land cannot support one horse, much less five. How will the animals be fed? In the case of Hills of Bandera, they will be fed with a touch of ingenuity, as the attached photo will attest.

Another seemingly unimportant question would be whether utilities are coming in underground or overhead. Underground is simple enough. But if it is overhead, consider whether the utility company will set poles perpendicular to the ground. One might laugh about this unless, of course, you find yourself doing business with Bandera Electric Co-op in Bandera, Texas. The attached photo is self-explanatory.  One leaning pole might be understandable.  More than a dozen would require some sort of reasoning.

The real estate industry seems to be a magnet for con artists, much like chum is a magnet for fish. There’s no getting around the fact that many of those involved in the development of land rarely place land conservancy near the top of their list of priorities, or for that matter, anywhere else on that list. Agendas are firmly in place and one enters their arena with this understanding.

Still, most developments contain a list of restrictions and covenants designed to protect your investment. A careful study of these covenants allows the buyer the opportunity to decide how safe the investment will be by providing some sense of what the future look of the development will be.

However, ground level investing ensures that you are investing before a homeowners association (HOA) has been formed, thereby putting you at the mercy of any con artists who might be on board the land developer’s agenda. Take for instance, the sales manager who might have purchased property just down the road from your investment.

The prospect of looking for land for your new dream home can be a heady experience. While searching for those ideal investment choices, ask the right questions.  Otherwise, the right answers will not be forthcoming.  As they say, the devil is in the details.