Buying land can be one of the best, easiest, and least cash-intensive ways to getting started in and building a lucrative real estate investing business. But many investors are burdened with a prejudice against investing in land and so don’t see the many benefits.
Or maybe they have tried it with poor results because, although the price was right, they didn’t choose the right piece of land. Success here depends on both a good price and the right property. So here’s our quick guide to buying land cheap in Chicago.
Where to Find the Opportunities
Property Lots – These are small parcels of land, usually just an acre or so, that can be had at a fairly cheap price. Usually, they are sold as lots for people to build homes on. The purchasing avenues include online sites, realtors, local land auctions, and direct sales.
There is, however, one important caveat here. You need to make sure the property isn’t cheap because of some problem or issue. For example: Is it too far from amenities? Would it be too expensive to get utility services to? And is it zoned properly?
Bank-owned Properties – These are usually foreclosed properties that you can pick up at a great price if you do your research. Keep in mind that banks want to unload these properties as fast as possible, for banks are in the business of lending money, not managing a property.
To find out about this kind of cheap land for sale in Chicago, you can contact the bank directly and simply ask about foreclosure listings. You can also keep an eye on the local newspaper and other appropriate places for sheriff sale announcements. At a sheriff sale, you can often, with the right bid, buy a piece of land for quite a bit less than the appraised value.
Rural Land – Owners of tracts of rural land are often eager to sell because the property is just costing them money. It will take some legwork, but contacting the owners directly is the best way to proceed. And these landowners are very often willing to consider owner financing.
Land Brokers – Going through a land broker can also be a smart move. They deal exclusively in parcels of vacant land, a lot of them, and have a great many listings. Another plus is they have already researched or even purchased foreclosures, which means they will have cheap properties for sale. They also offer many cash deals where the price is substantially reduced.
What to Look Out For
As with anything else, if a cheap land deal seems too good to be true . . . it probably is. So any quick guide to buying land cheap inChicago wouldn’t be complete if it didn’t warn you about the pitfalls to avoid. Below are a few we consider the most important.
Zoning – You simply have to know exactly what the property can and can’t be used for. You can’t, for example, buy a piece of land with the intention of selling it to someone who wants to build a house on it if it is zoned for commercial use only.
Annual Tax Obligation – A certain piece of land may be enticingly cheap, but if the taxes are outrageously high, it won’t be a bargain after all. A reasonable annual tax obligation would be around 1% to 4% of the property’s market value.
Flood Zone – In some areas, some plots of land are very cheap – and very vacant – because, when conditions are right, they are underwater. So be sure to check whether the property is in a flood zone.
Sewer-system Options –If you plan to build residential structures on the land or sell it for that purpose, there must be viable sewer-system options. And if the land is too far from a city or town, a septic system is the only other option. And this means, barring installation of an aerobic system, the soil must percolate. But if the soil can’t pass a perc test, you may not be able to realize any significant return on your investment.
Keep in mind that this is just a quick guide to buying land cheap in Chicago, hopefully, enough to help you get started.