Land and Development
Commercial land is increasingly becoming a popular sector for investors. It has many upsides, including the price. In most markets across the country you can find plenty of options for reasonably priced raw, developable parcels. This is particularly true in more rural, less populated markets. Markets like Hattiesburg where commercial land has not become scarce due to extreme spikes in development.
Great for first time or seasoned investors, commercial land is a relatively safe and steady real estate sector. Furthermore, it has high earning potential, which pays off big over the long-term. Although it can be lucrative, it’s not totally without risk. Whether you choose to simply sit on a raw commercial land parcel, or increase its value through development, there are a few things all investors should know before diving in.
Land Use and Zoning
If there is only one thing to learn about a potential commercial land investment, let it be the zoning restrictions. Nothing is more crushing than purchasing land to develop into a wonderful new office building… only to find out that parcel is zoned for residential use only. As a result, you now own land you can’t use. We’ve seen this happen too many times to count.
People build and develop on commercial land everyday, so it’s not to say it can’t be done. Although, zoning is a process with many restrictions and a lot of political checks and balances. It takes time and energy and requires investors to not only be realistic with their expectations…but to do their research.
A great place to start if thinking about purchasing parcels in Hattiesburg is to visit the City of Hattiesburg Department of Urban Development. This site is a great resource with lots of information on current restrictions and permitting processes.
Research is Key
When purchasing any commercial real estate asset, due diligence is always an important factor, especially in commercial land investments. The golden rule with land is that it’s not what you see that can become a problem; it’s what you don’t see. Typically, unforeseen issues arise long after a sale is finalized. With so many factors affecting value, doing intensive research up front is critically important.
- Hidden Problems: With this type of commercial investment, you literally have to look underground for potential pitfalls. Testing for hazardous waste from underground storage tanks, septic systems, old wells, underground pipes and cemeteries are just some of the things to look out for.
- Topography: A commercial land asset may be zoned with your projected use. But, that doesn’t mean it can structurally support the property you want to build. From cliffs and valleys to wet and dry lands, understanding the topography of a commercial land investment is crucial. This will help you avoid flood zones and other pitfalls.
- Easements/Access: If you make it past the zoning process, have all your permits and are ready to break ground there is still one important factor to consider: access. Land parcels come in all shapes and sizes. Because of this, the only way to access your property many be by going through someone else’s. This is called an easement. It’s important to know if any exist for the commercial land you are looking to purchase.
Don’t Do It Alone
Purchasing commercial land can be a complex process. As such, it requires expert knowledge to ensure you are making the right financial decision. With so many issues that could potentially alter value, using a professional is the only way you should consider investing. A quality Advisor will guide you through all steps of the purchasing process. This includes due diligence to the deal table, ensuring that you see the maximum return on your investment.