If I just buy the land, can I sell it in five years’ time?
Investing in real estate can be a risky manoeuvre, particularly during a down market trend. Though USA real estate prices appear to be on the mend, many overseas investors may still wonder if it’s wise to purchase cheap land in the hope of selling it at a profit in a few years’ time.
Understand the basics
Home mortgages and land loans are generally similar, but there are a few important differences that potential buyers should understand. Financing a Florida land purchase typically requires a longer loan term and a more flexible repayment schedule than a home mortgage. If the loan will be repaid using income generated from the land, such as eco-tourism or the sale of agricultural products, a variable payment schedule is even more important.
Options available to land investors
When buying properties abroad, purchasers can choose from variable or fixed rate mortgages on US land in Florida. Investors who want to benefit from the current low US land interest rates may select variable rate financing. These types of loans are held by the lender and aren’t sold to other financial organisations. Variable loans are typically more desirable if the land is intended to be sold in the short term. Fixed rate loans of up to 30 years are usually preferable in markets where interest rates are now on the rise. However, many USA land lenders do not offer fixed rate loans on land-only purchases.
Main sources of land purchase financing
In the US, commercial banks, insurance companies, mortgage companies, private lenders and Farm Credit lending cooperatives are primary sources of financing on investment property. Some of these organisations deal with certain types of Florida real estate more than others so potential buyers should do a bit of research before seeking out a lender.
Important tips for potential land buyers
Research: keep in mind that the listed prices are merely what sellers are asking for their property; these prices don’t necessarily reflect what the land is actually worth or what similar parcels are selling for. An experienced local estate agent can offer trustworthy advice on the local market, while a check with the county appraisal office can give a more realistic valuation on the property.
Infrastructure: selling a remote parcel of US land could pose a challenge down the road. Those who intend to put their land up for sale in a few years should look for properties with a clean water supply and access to septic tank or sewer, electric, cable, internet and phone services. Road maintenance, rubbish collection and school bus routes may also be important selling points in the future.
Codes and restrictions: some land for sale in America may carry certain restrictions on property use, subdivision or territorial jurisdiction. In Florida, there are also environmental concerns to consider, such as the presence of endangered species or threatened ecosystems. These issues could impact future buyers.
Surroundings: desirable tracts of land are easier to sell. Large livestock farms, noisy highways, commercial developments and such can all be deterrents to potential buyers. Thoroughly researching the surroundings before committing to a Florida land purchase is the easiest way to avoid these problems.
