Here is a checklist of useful questions to pose to a seller or seller’s representative when looking at a specific piece of land or property.
We hope this helps you get the full lay of the land, so to speak, but please note that this checklist is intended as a general guide rather than exhaustive outline. Every piece of land differs, just as real-estate transactions will vary based on different locations, property uses and individual buyer and seller circumstances. Please consult with a qualified land professional to assure you are getting the right information and advice for your land or property purchase.
- What are the access rights on the property? For example, does the land offer legal access to a public road or is access provided via an existing deeded easement?
- Is this land or property served by existing utilities like electricity, sewage, water? Are any wells or septic systems installed on the property?
- Has the land been surveyed recently? Are the boundary lines painted or marked?
- Who are the adjoining neighbors? Are you aware of any current property line disputes with neighboring landowners?
- Do any mineral rights such as for timber, water or gas convey with the sale of this property?
- Are there existing easements in place on the property, including for conservation, utilities, access or adjoining owners?
- Are there any known environmental issues with the property? Have the current owners received notice from any governmental entities about future assessments that would affect this property?
- How is the property zoned? What are permitted uses or special exceptions for this piece of land? (This is also a question that can be asked of the local government or municipality where the property is located.)
- Is the property governed under the terms of a Homeowners Association? If so, what restrictions apply to future development of this land of property?
- Are you aware of any development proposal for any adjoining land or properties?
- Are there existing tenant or lease obligations to others on the property?
- What are annual property tax obligations for the land or property?
- Why is the property owner selling this particular property? (Please note, the seller or seller’s representative is not required to disclose this information, but it doesn’t hurt to ask.)
- Is the seller offering financing on the property?
- How soon can the seller close on the transaction?
- Does the property include any water features such as lakes, rivers, springs or ponds? What about internal access routes such as fire roads, trails or pathways?
- Where are the nearest public access lakes or waterways? What are the closest public lands (i.e. state or national forest, state or national park, BLM land)?
- Do any property improvements not convey with the sale (e.g. fencing, outbuildings, gates)?
- Will my purchase of this land or property include a fee simple General Warranty deed?
- Am I able to obtain clear title to the property with title insurance?
- What is the quality and value of timber on the property (e.g. types of timber, age of trees, planted or natural species)? Where are the nearest timber mills and outlets? Is any of the current timber stock sellable?
The above questions should help you paint the picture of a property’s existing state as well as future potential. In addition, of course, there will be many questions that may relate to various state and local conditions and regulations that should be fully discussed with the seller.
Original article posted at Land.com at https://www.land.com/buying/what-to-ask-when-buying-land/
August 31, 2018/
My days are spent working with buyers and sellers of recreational and tillable land. So when I was approached about writing an article about recreational land it was a no-brainer. My fellow Minnesota agents and I do seminars every year at our state’s Deer Classic and the topic is “Land Buying & Selling 101”. During each seminar, we do a Q&A and we typically find many of the questions are about building equity in a current property or future property. Although I live and work in MN, this information will hold true for many recreational properties and almost any place whitetail deer call home.
In my opinion, the cheapest and most effective thing you can do to grow equity and value to your property is purchasing some trail cameras. Buyers are always asking me to see trail camera photos from the property for sale. When we check the analytics of our listings, it is proven that a listing with good trail camera photos vastly outperforms a listing without them. In addition, I personally advise my new buyers to go buy a thumb drive and save trail camera photos from day one, even if they have no plans of ever selling. It is great to be able to show a buyer 2-10 years of trail camera photos and allow them to see the quality and quantities of deer using the property.
The next low cost and high return item would be “road appeal”. Much like curb appeal on a house, that first impression of a property will have a lasting effect. Start at the entrance of property; even if your property is not completely fenced, installing a simple yet sturdy gate that is lockable with a chain and adding a “no trespassing” sign, will add appeal for a buyer. This low-cost item gives buyers a good sense of security and sets the tone of what they are going to see when viewing your property. If you have spent any time on a farm you know there is a good chance of coming across an old junk site. Removing these items can be time-consuming but in the long run, it will be build value in your property and make it more marketable when it comes time to sell. Clean up any trails you have on the property so when touring the property it is easy to navigate.
A property that is mainly used for whitetail deer hunting in a managed neighborhood is highly sought after. Creating a so-called managed neighborhood will take a great deal of work as well as time but will give you an abundant return. I’m not going to discuss how a so-called management group should be run as that is an entire article in itself. Ideally, you want your property to be in the center of this management group. Reaching out to all the neighboring landowners of your property is where you start. Once you get them on board with a management plan ask them to reach out to their neighbors and so on and eventually you will have a large area of landowners all working towards the same management goals. Sounds easy, but I can tell you it is not. This will take a lot of time and you will most likely have some people that will not want to participate and that is ok. The goal is to try to get as many on board as possible and work on growing the group. This typically will take years, but keep in mind the value you are adding to your property.
The next few items are more labor-intensive and cost more money to complete and maintain. If you watch any hunting show or spend any time around an avid hunter you know that food plots are a huge factor when it comes to hunting whitetail deer these days. Just remember when it comes to food plots bigger isn’t always better. Making sure you locate the food plot to maximize the hunting and access on the property is more important than the size of the plot. Having several well-placed food plots and keeping them maintained every year will be not only be a great increase in value, it will also help make memories when hunting season comes around. In my opinion even more important than a food plot is water on a property. Not all properties will have flowing water on them. Even those that do may not have the water in ideal locations for hunting. If your property is lacking a water source I personally would add this feature before I would add a food plot. This can be as extravagant as hiring an excavator to install a pond in a location for natural run off to hold water or as simple as taking a 55-gallon drum and cutting it in half and digging it in the ground. I personally use a product made by a local company that holds 100 gallons of water and has a trough for the water to sit in and allows all kinds of wildlife to drink from it. I have 5 of these on my property and they are all located in great travel and staging areas I hunt. I do have to fill them a few times a year but since they are mobile they give me the option to relocate them. Since they are portable I can make location changes based off of my hunting observations. I can’t do that with a pond made by an excavator.
A good trail network will allow you access in and around a property. The extent of the trail network needed will depend on the topography and makeup of the land. I personally deal with the rolling bluffs of Southeast Minnesota so creating access from the bottom to the top is almost a must if you want to get the most for your property. Most landowners do not own excavating equipment so I highly suggest asking around to find out who others have worked within the area to do such projects. It is in your best interest to do your research and get references prior to hiring someone. A quality bulldozer operator can accomplish a lot in a short time. Most first time buyers are nervous about what it will cost to create a good trail network. I have even encouraged sellers in the past to invest in a trail network as it I knew it would make their property more marketable and they would see the return on their investment.
Hunters from Minnesota we are used to hunting in extremely cold weather. In my opinion, the old saying “you’re not a real hunter if you sit inside a blind” has gone out the window in the last decade. Box blinds are here to stay and the more hunters that hunt out of them the more buyers want them on their property. As an example, our state’s Deer Classic event this year included at least 7 different manufacturers of enclosed deer stands. If a manufactured stand is not in your budget you can also build it out of lumber, just make sure it is clean, sturdy and safe. From there adding quality sturdy ladder or hang-on stands will also increase your property value. Stands are something every hunter wants and if you have created a great location for them and they’re of good quality you will always get your money back out of them plus you get to enjoy them while you own the property.
“Has this property been surveyed?” is almost always asked when I’m showing a potential buyer a property. In my territory, the land is not flat and often times you can’t see from one corner to another. Spending the money to hire a professional surveyor to mark your property boundary corners as well as points between the corners will make a buyer more comfortable when purchasing your property. It also allows you to easily establish or maintain your property line. This can also be helpful when doing any logging, adding a trial system, food plots, water locations or even hanging stands and posting your property. With anything, I would suggest getting a few quotes on this project and asking around on who someone would recommend. If you are not in a time crunch to get this done I would recommend asking the surveyors what time of the year they are least busy as they may give you a better price during their slow time versus their peak time. In my area, the downtime is during the winter.
These next three improvements are much more expensive but can add some serious value to your property. They are not going to be good for all buyers and will require more thought than the previous improvements I have mentioned. These three items, in no particular order, are 1) adding a driveway, 2) bringing in power and 3) drilling a well. A couple questions you need to ask yourself or your group of owners are “Will this improvement be something almost all future owners of this property see value in?” and “Could it be any cheaper to do it later versus now?” Adding a driveway that is easy to travel won’t get cheaper with time and will always make the property more enjoyable and user-friendly. Bringing power to the property will also be worth your investment. This can become costly if you are having the power brought in a significant distance. However, I have talked with clients that had power brought to their property for almost free and I have met clients where it was going to cost them $10,000 or more to get power to their property. So this one can get tricky, if the cost to bring power to the property is extremely high and you are not going to use it for a length of time it might not be an investment you will want to add to your property. The last of the three items, drilling a well can vary in cost all over the country. Personally, I know the cost is pretty significant in Southeast Minnesota. However, when I tell a buyer there is a well on the property they all understand what cost went into it and they see the value. I do not see the cost of these three items getting any cheaper by waiting.
Now we are going to talk about the biggest decision that can add value but at the same time affect the marketability to the greatest number of future buyers of your property. I get people all the time that ask if they will get their money back out of a cabin if they built one. My advice is to keep it simple, yet clean and functional, don’t get elaborate or install high-end finishes if you want to make sure you get your money back out of it. It is best not to overbuild as it will limit future potential buyers. As soon as you make a cabin or house addition to a property you immediately take some future buyers off the table. The goal is to not eliminate too many of the remaining buyers by building something that is either too personal or elaborate that it would shrink your potential buyer pool so small you will not see your return on your investment. Don’t get me wrong if you want to build a custom log home on your reactional land and you enjoy it for 20+ years, go for it. You will get your return out of the use and enjoyment. If you have a short-term plan for the property then stick to something simple.
As you can see there are many different ways you can increase the equity in your recreational land. These improvements may take years or even decades and can vary drastically in cost but they are all great ways to increase the equity value of your property while enjoying it. I will leave you with the one thing I always ask while giving my seminars. “In a show of hands how many of you have ever made any memories on your 401k or stocks or bonds?” No one has ever raised their hands, but I can promise you every single landowner in America has made memories on a piece of land they have invested in. Owning land is one of the best financial investments you can make in your lifetime and the memories you make on it while you own it will be your favorite return on investment.
Original article posted at Realtor’s Land Institute Blog, The Voices of Land
About the Author: Bob Stalberger, ALC is the Land Specialist in Southeast MN for Whitetail Properties Real Estate. Stalberger is the Realtors Land Institute Minnesota Chapter President and a recipient of the Apex Awards 2017 Top Twenty Producer. Bob specializes in selling hunting and farmland and has been an ALC since 2016.
Before the bank will lend you money to purchase land (or before you can use your land as collateral for a loan), you will be required to get a land loan appraisal. Just like with a home appraisal, a land loan appraisal is used to determine the general value of a property. But the appraisal process itself is a little bit different than it is for a home. Here’s what you should know about getting a land loan appraisal before you start the process.
The total appraisal time will vary depending on the size of the land, where it’s located, and how you intend to use it, but figure that your land loan appraisal will take about two to four weeks to be complete. Sometimes, especially if there’s not a huge availability of nearby appraisers, it could take as long as six to eight weeks.
Methods of appraisal
There’s more than one way to determine the value of land being appraised. The exact method used for your parcel is up to the appraiser and/or the lender, and will likely factor in more than one of the below appraisal points.
Comparison value. Comps are king when it comes to home appraisals, and they’re important for land appraisals too. In a comparison-based valuation, an appraiser places a high priority on the market value of the land in relation to other land properties sold in the same area in recent years. Improvements and desirability factors will play in to the value that your land is assigned, so your beachfront access or new irrigation system will still count in your favor.
Residual value. If there is a lack of valid comps, the appraisal will look instead at the residual value of your land. This type of valuation takes into consideration the possibilities of the land, particularly what can be built on the property and how much that structure would cost and sell for.
Land usage. Land can be a risky investment for lenders, and they like to know that it’s worth it. As such, how your land is zoned and what you plan to use it for matters in appraising its value. Generally, commercial land will appraise for higher than land you’re purchasing to farm or build a home on.
Lot details. Your appraisal will necessitate a land survey to determine the lot’s exact size, as well as other variables like buildability and easements. Figuring out these details helps the lender better establish how much your land is probably worth in relation to its borders and possible usage.
Other important land loan appraisal factors
There’s no one equation for determining land value, but there are certain understood factors that increase or decrease what a property is worth. Your appraisal will take into account things like the current state of the land (if it’s completely untouched and will require significant work before it’s usable, that might work against you), as well as things like location, current utility hookups, and the overall quality of the land.
A land loan appraisal is designed to protect you, as much as the lender, from spending too much on a parcel that doesn’t warrant its price tag. Pay attention to what you learn so you can be sure to make a sound investment.
By Laura Mueller
Shared from LandHub, August 23, 2018 https://www.landhub.com/blog/what-does-a-land-loan-appraisal-entail/
Buying a home is a dream come true for many.
To purchase that property with river, lake, or oceanfront access may top the list for many individual’s American Dream.
From personal relaxation, giving your family all that waterfront property has to offer, and the possibility of major returns on investment, it’s hard not for the pros to outweigh the cons.
But before plunging into buying your dream house, just take a few minutes to consider these challenges surrounding the purchase of waterfront property.
Observe the Property Closely
When it comes to buying a waterfront property, the most important thing to consider is the land and not the house or structures currently on it. Altering the structure is easy, but the possibilities of altering the land itself is much more complex.
The land itself can have many impeding factors for existing or future development, so don’t hesitate to hire talented engineering, ecological or soil experts to evaluate your potential purchase.
In addition to the land itself, make an effort to learn more about the surrounding areas tourist activity, potential neighbors’ use of the land and water, and any future development. The last thing you want after a waterfront land purchase is to find out your plans and investment are hindered by factors out of your control.
Check Insurance Requirements
Unlike normal land or homes, waterfront properties often come with their own set of insurance requirements. Some factors mentioned above can have outsized effects on your homeowner insurance premiums, as well as additional flood insurance costs.
You can get more details from the National Flood Insurance program here.
Even though the amount may vary, it is always better to be covered when a massive flood causes thousands of dollars damage to your home.
Another type of insurance that you might be wise in investing in is wind insurance. Your properties geography and the makeup of the surrounding land mass may cause increases in wind speeds.
All of these insurance requirements can be estimated with early due diligence on your potential waterfront investment, so begin diving into pricing them out as early as you can.
Check Legal Factors & Requirements
Waterfront property often comes with additional legal factors to consider, depending on your planned use or activities on the land. Understanding these legal factors will save you time and headaches, so don’t neglect this due diligence task.
Your State government will have guidelines and laws around building additional structures like docs, sea walls, boat houses and even guest houses.
Hiring a reputable real estate lawyer will give you give you piece of mind and help guide you while planning for this investment.
Assess The Value Of The Waterfront Property
Although this might be the first thing you consider before investing in a piece of waterfront property, you might do well to check on the first three tips first. Each may have a significant effect on the value of the property, which will help you decide whether to purchase the land or even provide you with additional information for price negotiation.
Oftentimes the value can depend on the availability of water sports activities, proximity to the waterfront, and even distance from municipalities, stores, schools, etc…
Put major effort into assessing the value of your potential waterfront land, the existing structures, and the surrounding property values and you’ll save yourself from losing money on the investment.
Hire a Real Estate Agent
The right real estate agent can provide intangible knowledge and support during the entire investment process, so don’t balk at finding the right help.
Local knowledge, connections, and even friendly repartee amongst the homeowners and other real estate agents can all be contributing factors to a successful property investment. Hiring the right agent will also save you a lot of time and effort in the long run, so take the opportunity to hire the best agent you can find.
The tips above are only the beginning of the necessary due diligence when investing in waterfront property, but starting with these five will get you off on the right foot.
To view Northern Michigan Land Brokers current waterfront properties, click here.
There are two new laws recently enacted which affect the recording of documents with the Register of Deeds, which will go into effect on September 18th. Learn more regarding these changes at the links below!
As we head into late summer here in the Upper Peninsula there are still a lot of great waterfront properties on the market. We currently have some amazing properties available on Lake Superior, Lake Michigamme, Portage Lake, Chocolay River, Twin Lakes, Copper Harbor, Sand Lake, Rice Lake, Perch Lake, Blue Lake, Bass Lake, Menominee River, Lake Pellisier, Sturgeon River, Lake Michigan, Torch Lake, and more!
Contact our agents today and we will match you with your perfect waterfront property.
Click here to see all of our currently available waterfront listings in the Upper Peninsula.
Timber prices are at a record high. The tragic wildfires of last summer and trade disputes as well as an increase in demand for new residential housing have all caused the price of timber to skyrocket. With low supply and high demand, timberland owners are sitting on a potential gold mine. To make the most off of the high prices, you’ll need to tread carefully. Here’s how to make the most out of the booming market.
Check The Timber Mills
Is your local log mill looking for a particular kind of log? Many mills are willing to pay extra for logs that meet their specific standards and may dock your pay if they do not. Some mills even pay less for logs that are larger than usual. This means you are getting less money for more timber! Scope out the pricing of your local mills to find out where your tress will make the most money.
Patience is the name of the game when it comes to timberland. Prepare to lose money for the first few years because you will need to spend money planting and taking care of the trees. Since timber doesn’t provide immediate returns, many people might be hesitant to invest.
However, timber has historically produced strong long-term returns. Many financial websites, such as CNN Money and Investopedia, recommend investing in timber as a way to diversify your portfolio. The returns tend to move countercyclically to other markets, providing your portfolio with a safety net. Not only is investing in timber a smart financial move, it is a good investment in your land. Timber is a hearty, relatively low maintenance tree that will produce steady returns for years.
To Cut Or Not To Cut?
When you cut your trees doesn’t only impact your current crop, it will also determine the growth and health of the next generation of trees. With prices at a record high, it can be tempting to cut down your trees as soon as they mature. Try to plan harvests around times that would benefit the saplings as well as when your timber is at its highest value.
Taking care of your timber now will result in high-value trees down the road. Regular thinnings, regeneration harvests, and timber stand improvements (the culling of undesirable trees and saplings) are all practices that result in healthier (a.k.a. more valuable) trees. Healthy trees mean healthy saplings and a whole new generation of high-value trees. It’s a never-ending cycle of profit!
Sky-high prices and an increasing demand have created a modern day gold rush. Although it can be tempting to chop down all your trees and cash in on the craze, long-term planning is the best option for you to make the most money off of your timber.
To learn more about timber, be sure to check out the newly updated LANDU course Timberland Real Estate on August 1st being hosted by the RLI Alabama Chapter.
This article was originally posted to the National Land Realty blog.
About the Author: Laura Barker is the Membership and Communications Specialist for the REALTORS® Land Institute. She graduated from Clark University in May 2017 and has been with RLI since October 2017.