For Beginners: Buying Your First Plot of Commercial Land

Published: 06-22-22    Category: Investing

Specializes in providing actionable insights into the commercial real estate space for investors, brokers, lessors, and lessees. He covers quarterly market data reports, investment strategies, how-to guides, and top-down perspectives on market movements.

Vacant commercial land for sale

Buying your first plot of vacant commercial land might seem daunting, especially if you are a first-time buyer or new investor.

The good thing is that it doesn’t need to be so complex as long as you know what you’re looking for.

For instance, while there are many factors that will determine the value of your property and your ROI, one of the most important ones is access to public roads.

If you plan on renting out your premise or using it for business, getting access to public roads will be key in helping potential tenants find your property easily.

Read on to learn more about best practices for buying commercial land.

Buying commercial land

The Primary Uses for Vacant Commercial Land for Sale

Commercial land can be used for several commercial property types, including industrial, office, multi-family rental, and retail space.

Each of these types has a specific use, and you need to have your land classified the correct way to avoid legal issues.

Land for Commercial Office Space

Land for commercial office space is set aside for office buildings and similar structures.

For example, a company’s headquarters can fill a large plot of commercial land for sale near you.

These spaces need easy access to roads, parking spaces, and other amenities to be highly desirable.

Land for Multi-Family Rental Properties

Multi-family rental properties, such as apartment buildings, are built on vacant commercial land.

These properties make money through rent payments from individual tenants.

They require similar access to amenities as office space since people need to be able to easily commute and access other necessities that they need without having to travel far.

Land for Industrial Real Estate

When used for commercial purposes, some forms of industrial buildings can be placed on vacant commercial land for sale.

Buildings like warehouses and factories are classified as industrial buildings and can be used on particular land that is set aside for industrial purposes.

Land for Retail Space

Retail properties can be found in just about any commercial area.

Retail shops, like grocery stores, malls, drugstores, department stores, and other large buildings, should be placed on easy-to-access vacant commercial land for sale.

Costs of Buying Land (Besides the Sticker Price)

The acquisition cost is one of the most important factors in buying any kind of property.

However, it’s not the only cost of owning commercial land. There are other costs that you need to take into account before deciding whether or not the property is a good investment.

There will be property taxes that you need to pay every year. This tax is based on the assessed value of the land, so when it changes, so will your taxes.

There will also be maintenance fees, which can vary depending on what kind of land you have and what its features are.

Step #1 – Find Your “Why”

"Why" is the driving factor behind almost anything we do with our life or business, be it buying land or building an office.

Before investing in vacant commercial land for sale near you, know and understand what you want out of it.

Decide whether you want to rent the property out or turn it into a business.

The second thing to do is to decide how you will use your vacant commercial land.

Will this be an office building? A retail space? Do you want to build an apartment complex and rent it out?

Knowing these answers will help you narrow down your options, helping you get a better deal on the commercial land you’ll need.

Step #2 – Find Your “Where”: Location Matters!

When buying vacant commercial land for sale, location is very important. If you are buying land for commercial purposes, you will want to look at both the public and private roads that surround your property.

You want to avoid buying land with zero access to public roads in order to make transportation easier.

Aside from the physical access points, think of other things that could affect the value of your property.

Think about the geographic location of your land and whether or not there are other buildings near it that could affect its value (known as comparable properties).

Don’t forget about zoning laws and regulations, either. Some properties are zoned for commercial use. Some aren’t, which means that you will either need to petition for a change to those zoning laws or make an adjustment to your plans.

Also, consider if the area is expected to see growth.

Is it near a road that is going to be expanded? Is a new shopping district being built in the surrounding area?

These are all things that can affect the value of your vacant commercial land, so you need to factor them into your decision-making process.

Step #3 – Figure Out Financing

Financing the purchase of the property will be key in determining the success or failure of your vacant commercial land investment.

Be sure to take into account the amount you will have to pay for financing and find out whether there are any other costs that you need to consider.

Get Pre-Approved

Getting pre-approved for financing is a major step that you need to take when buying vacant commercial land for sale.

Your lender will give you all the details and requirements that are needed in order for you to secure the financing that you need.

Step #4 – Hire a Broker or Other CRE Professional

You should always get professional help when first buying vacant commercial land for sale.

It can be a good idea to hire a real estate agent or broker to help you find your land.

Why Work With a Broker?

Brokers have the ability to look at properties that you may never see because they have access to more properties than what is listed in the open market.

They’re also required to have more extensive training and experience than an average real estate agent.

A CRE Attorney Is Just as Important

You will also want to consider hiring a CRE lawyer to help you through the whole process of buying commercial property.

You can benefit from their expertise and have them review any legal documents, saving you from getting stuck in a bad deal.

Step #5 – Buy and Hold: Timing Your Sale

Buying and holding land long-term is often the best strategy for max ROI; after all, they’re not making any more of it.

However, there are other ways to make money from your investment as well.

This includes leasing your land out, selling it short-term, or making improvements to it.

Tips for Land Upkeep and Maintenance

Maintaining and keeping your land in good condition is important to protect your investment.

Consider these best practices:

  • Learn about the area in which you have invested so that you know what to expect from it.
  • Work with a property manager or an outside consultant for your land so that there will be someone who can take care of any issues or concerns.

Maintaining vacant commercial land for sale near you can be an expensive process, but it’s one that should not be ignored.

You need to do it in order to keep your investment safe and profitable.

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