Many potential homebuyers and real estate investors gravitate toward purchasing a prebuilt house or condo as an investment, but raw land for sale can also provide a solid return on investment. While it does come with its own unique challenges, if you can master the intricacies of buying land in California, it can be an excellent asset to your overall portfolio.
The key to any successful is California land a good investment is supply and demand, and it’s no different for land for sale. As more prospective buyers and investors seek to buy land, the price of available property will rise. The same principle is true for all types of investments, including stocks, mutual funds and fine art.
Unlike other types of real estate, vacant land doesn’t have ancillary costs like utility bills, mortgages or property improvements and maintenance. This is one of the primary reasons why investing in raw land offers a higher rate of return than purchasing homes or other buildings.
You can find plenty of vacant land for sale in California by searching electronic real estate websites, local listings and Craigslist. However, if you’re serious about investing in land, you should consult with experienced and knowledgeable representation to identify the best opportunities. The right real estate agent will ensure you’re looking at all available properties and analyzing the market accurately.
The biggest drawback to purchasing land in California is the high cost. Compared to other states, residential land prices in California are among the highest in the nation. In metro areas, average per-acre prices exceed $18,000 compared to $5,000 nationally. The high price point is due to the state’s high desirability, limited inventory and intense demand pressure.
Whether you’re investing in California farm acreage, ranch land or other rural property, the high demand for this type of real estate is largely due to a booming economy. Major cities across the state offer abundant jobs in fields such as tech, healthcare and agriculture, driving home values and attracting skilled workers. The state’s majestic landscape, year-round sunshine and recreational advantages also contribute to its high appeal.
It’s important to understand the zoning, environmental rules and building codes that govern your chosen area before you purchase land. You should conduct thorough due diligence and involve land use attorneys early in the process to avoid expensive mistakes that could render your investment useless. Construction expenses are high in California, and unforeseen challenges such as flooding, soil erosion and drought can add to your overall costs.
Besides navigating regulations, you’ll need to invest in infrastructure such as roads and utilities before developing your land. In addition, you’ll need to obtain the necessary permits to build a house or other building on your property. Lastly, California land may not be suitable for all types of development. Some land may be restricted for mining, conservation or military purposes, which can limit your options for future use.