A few years ago, I put together a list of the top ten mistakes that I think most first time land buyers make. It was sort of an attempt to provide a “cheat sheet” for first time land buyers to avoid some of the pitfalls of the land buying experience. Here are a few of the more “expensive” land buying mistakes:
Buying More Than You Can Afford
I have seen folks buy 200 acres they couldn’t afford, because they could borrow the money, when they should have paid cash for 20 acres they could afford. If you are buying property for recreational uses, it’s pretty hard to enjoy something that is a financial burden. Remember that while land is a great investment, it is not as easy to sell as a mutual fund. Selling land can take some time, so don’t overextend and get in a bind. You’ll enjoy your little place in the country a lot more, if you’re not worrying about how you are going to pay for it.
Buying Property without Considering an Exit Strategy
I know it is the tract of your dreams, and I know you are going to keep it forever, but the fact of the matter is, none of us knows what tomorrow will bring. So, if you are buying land, you better have a plan to sell it, even if you are not planning to sell it. Let your exit strategy influence your purchase. That way you can focus not only on why a particular tract is valuable to you, but also why it might be valuable to someone else, just in case you ever need to sell it. Be smart. Have an exit strategy. Plan to sell it, even if you never plan to sell it.
Failure to Check out the Neighborhood
Make sure you know the neighbors and the neighborhood before you buy your dream tract. Noisy neighbors (like a rock quarry, or a saw mill, or a railroad tracks), or smelly neighbors (like poultry or hog farms), or ugly neighbors (like landfills or industrial parks) can spoil your quiet enjoyment of your country getaway. Look around the area and ask questions, because bad neighbors and bad neighborhoods may be with you for a long time, and my experience has been that relocating your tract to a better neighborhood is not a practical solution.
Buying the Cheapest Tract
I love a deal. I love spending as little as I can on a tract of land. I also know that if you are determined to get the most acreage for your budget, you are likely to make a mistake. The cheapest tract is not always the best deal. Cheap land is cheap for a reason…..It is ugly, land locked, cut-over, swampy, or has some other warts on it. For the most part, tracts are priced at what they are worth, so don’t get consumed with the lowest price per acre, or you might wind up getting a tract that you don’t want…or missing a tract that you do.
Accepting as Fact ANYTHING, without Verifying it Yourself
We have all heard it before. “There is $1000 per acre of timber out there.” “Sewer is coming.” “You can’t smell those chicken farms from here.” “The roads on this tract are always accessible.” Be aware that sellers, agents, heirs, and neighbors all have a dog in the fight, do not ultimately have your best interest at heart, and may provide you with bad information. I’m not saying that everyone is intentionally deceptive, but many people simply pass along information that they have been told by someone else. Especially when buying land, you need to make sure that you make decisions that YOU know are based on truth rather than what someone has told you. You can’t possibly know everything you need to know, but you can find out, and you should. Get an expert opinion of timber value. Get a written verification of county infrastructure, or utilities, or zoning. Stand downwind of the chicken houses (on a day when they clean them out) and “sniff” for yourself. If you have concerns about some environmental issue, get it checked out. Do your homework.
You can get my complete list of Land Buying Mistakes PLUS the Top Ten Myths/Truths of Land Ownership by joining our facebook page at www.facebook.com/greenwoodproject