For over the last couple of decades we have all been bombarded with property development TV shows about flipping houses, buying properties, usually renovating them and selling on for a profit. This is all great but what about buying up housing plots? Is it a good idea to buy and build on them? or just hold them as an investment?
This guide will look into the options, benefits and drawbacks so you know what the best move is.
To Build Or Not: Construction Cost Against Potential Return
The first question about investing in house plots is whether to build yourself or not? It’s been said that land as an investment could be risky if not done properly. You need to research the plot or plots very carefully to ensure you’re making a wise investment. Ensuring that there is adequate planning permissions for the type of property that would be built on it. Other concerns are costs of access to construction, such as water, gas, and electricity, are these available in the property location? If not having cables or pipes laid over any significant distance can be a hugely costly endeavour.
Is it cheaper to buy an existing house though? This is a tricky question as there are so many factors and as with anything research is key as costs can easily get away from you if you’ve not found out of any potential issues before construction begins. One great tip was to check if you can get set prices rather than estimates from any contractors you are hiring and where possible don’t commit to paying up front, most contractors will be happy to set up a staged payment system that way they get cash as they go through and you can have something held back if you’re unhappy with work done so far.
Location Is All-Important
Once you have all the ideas of what you are going to do with a plot you’ll need to think about location and that can be a tricky decision too, you’ll need to consider budget, of course, and what type of land you are looking to buy. Is it rural, with all the added infrastructure installation costs or a more urban or suburban plot which will cost more initially but might have less in set up cost.
Where in the country is another big question you’ll need to answer. There are a fair amount of up and coming markets which are seeing great returns. I’ve heard a lot of good returns made in Iowa, which has a great deal of development opportunities and a diverse range of land available so that you can find something to suit your budget and project type.
Selling On, When To Do It?
Once you’re set with the land then you have to arrange to sell it so be sure to realise that has a time schedule, legal costs and difficulties in itself. As for the timing it’s difficult to say as there is always risk of selling at the wrong time but it’s often said don’t hold it for too long,especially if it’s not been built on, as this might give the impression there’s an issue with it. If you have built there is plenty of help in getting that right too.
Overall buying land is not an investment for the timid, but if you prepare well and do your research and realise the amount of work involved in this then it can be a great opportunity.