When hunting down real estate properties with the intention of starting with a clean slate, you will likely find many raw and vacant land options.
The difference between the two is that raw land is a parcel of land that has been completely untouched by any form of human development or management and vacant land does not have any immovable development such as buildings and structures, but may have been maintained or utilized in some way.
The qualities of these two land classifications vary from property to property and you should keep in mind that each option can be a worthy land investment when weighing out all the factors that play into the value of these land parcels. Lands that are relatively untouched offer so much potential for investment opportunities and versatility, as far as development projects, or simply utilizing the space for natural resources. You should, however, carefully consider all aspects of the land before committing to a purchase.
When considering the purchase of raw or vacant land, you should be well aware of the potential government restrictions that have been placed on your land by organizations such as the Land Bureau Management, Forest Management Bureau, and the United States Department Of Agriculture. In addition, you should consult your real estate service in regards to the zoning regulations implemented by your local city - especially if you are purchasing land in an urbanized area.
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Raw land has traditionally made real estate investors a bit weary due to the prospect of financial returns taking a prolonged period of time. This can often make raw lands a more difficult plot of land to flip for quick cash.
While this may be the case in many situations, there are still enormous benefits for potential developments, ideas, and financial investment opportunities when carefully weighing out the specs and logistics of raw lands.
With that being said, just like any investment, buying raw lands does come with its fair share of risks. These risks can be greatly mitigated based on where and when you choose to invest, as well as your ability to be a versatile property owner.
Let’s dissect some of the benefits and risks that come with buying raw and vacant lands.
Raw Land Benefits
Since raw lands are such versatile properties, the benefits will be defined based on what your end goals are. The potential for development projects is virtually endless, as you have been given an empty canvas to pursue whatever creation you are ambitious about for the property.
Having a clear idea of the vision for your raw land will make choosing a plot much easier, as the qualities of the property will make the investment far more feasible. Here are some things to keep in mind when evaluating raw land.
The cost of any type of land is the first thing to always assess when hunting down the property that’s right for you.
One of the great benefits of buying raw lands is that they can be extremely affordable. Unlike developed or vacant lands, which have likely already received some form of investment and maintenance, raw lands offer you the freedom to truly start with a clean slate and start your property investment from scratch.
This is particularly beneficial for buyers that know exactly what they want to do with their raw land from the beginning and don’t want to work around previous developments or even have to demolish or undo what someone else has built, which requires more financial obstacles getting in the way of your end goals.
Given that raw lands have been left completely untouched, the potential you have as a landowner to pursue whatever vision you have for the property can be met with little oversight and plenty of versatility.
This can often make purchasing raw lands an opportunity for a series of different property goals, which you can improvise on over the years depending on market trends, as well as your own personal interests.
Let’s take a look at some of the versatile ways raw landowners utilize their properties.
There are so many different forms of development you can choose to pursue when owning raw lands.
Given that raw lands are typically not within immediate confinements of urbanized environments, you can generally begin to go after just about any development project you desire - without falling into much of the zoning restrictions involved in city building.
Let’s take a look at some of the development projects you can implement on raw land.
Building residential properties can be far more affordable on raw lands than in urbanized areas. Given that you have much more room to play around with when developing residences on raw lands, you can choose to build a wide variety of different living spaces.
You can build residences such as:
- Apartment complexes
- Gated community
- Large housing properties
Raw lands essentially allow you to invest in a potential hybrid urbanized environment that is away from the business of city life with the quietude of the outdoors. This is especially appealing for those that want to live in a more rural environment.
In addition, if you do not have the ambition to pursue housing developments for re-sale, purchasing raw lands for the purpose of building your own home offers the potential to build the home of your dreams with loads of space to utilize.
Having your home built on raw land generally gives you plenty of extra space, which you will likely not need to utilize for development and can simply leave for joyful recreational activities.
However, many owners of raw lands have chosen to buy these properties with the very intention of converting the land for recreational use. This can be pursued as a financial opportunity to establish recreational activities in areas that require large amounts of land without the high costs of doing so in urbanized environments.
Some examples of this are:
- Golf Courses
- Country Clubs
- Polo Clubs
- Quad riding and Dirtbike Racing
In addition to the financial opportunities one could achieve with their raw lands from recreational use, a property owner has the versatility to allocate certain parts of their land for these activities while at the same time designating a specific part of the property as a living space; for personal or residential use.
One of the incredibly versatile aspects of raw lands is the ability to convert these properties into different classifications of land.
Since the property has no development and will often come with some form of natural aesthetic or resources, you can choose the direction you take your raw land based on your values or your financial intentions.
To understand the potential for converting your raw lands to different types of classifications, you are going to want to assess the local environment and ecology of the property. To do so, you will need to conduct an Environmental Impact Assessment by a specialist in the field.
Once the assessment has been conducted, the specialist will provide a report that details the environmental qualities of your land so that you can begin to pursue your conversion process.
Here are some examples of how raw landowners have converted their properties:
- Farmland - If your assessment highlighted that you have raw land with fertile soil, you have the ability to establish the property as a farm for potential food growing. Based on the area of your property, this can prove to be an extremely beneficial opportunity for financial gains.
- Conservation Easement - If the report indicates that you have raw land with significant environmental significance such as essential habitat, critical or endangered species, and vital natural resources, you may have the ability to convert your property to conservation land. A conservation easement ensures the permanent environmental protection of your land and also comes with major tax incentives.
Depending on your values and intentions for your property, raw lands can provide a perfect approach for conversions.
Raw Land Risks
The prospect of buying raw land does come with many versatile and opportunistic benefits, but if all qualities and aspects of the property are not carefully weighed out, it could wind up becoming a poor investment.
To understand what you’re in for when considering a parcel of raw land, let’s take a look at some of the potential risks associated with these properties.
The location of your land, in addition to the cost, should be the two primary factors that influence your decision-making.
To determine the value of the location of your land, you must consider what you aim to achieve by purchasing raw lands.
Regardless, the location of raw land tends to be in less attractive areas than vacant lands, which can be found in urbanized environments. With that being said, the cost of the land may be cheaper but there is often a reason for that.
When considering the location of raw land, be sure to analyze the market value of properties in the area, as well as conducting a thorough and professional valuation.
Since raw land has been virtually untouched, it’s not uncommon to find raw land that some form of a conservation easement that has been put in place on the property.
You will likely find that raw lands have some form of environmental significance; ranging from protected habitat, endangered species, or vital resources. While these may seem like appealing qualities to some buyers, they do often come with great limitations on what you can actually do with the land.
Properties with conservation easements generally come with strict guidelines and restrictions on how the landowner can develop or modify the land. Depending on the restrictions, landowners can find themselves unable to develop things such as:
- Fencing and barriers - if the easement is set up for habitat and wildlife protection, you may likely have some or many limitations on how much fencing you are allowed to build on your property - if any at all.
- Buildings and structures - the prospect of adding additional homes, buildings, and certain structures are often strictly prohibited on lands with conservation easements.
- Property division - diving your property into different sections for the purpose of individual re-sale or development can be either highly difficult or even impossible.
Depending on your intentions for your raw land, an easement can be a huge obstacle in the way of your end goals.
While buying a parcel of raw land does offer the freedom of having a clean slate to pursue your development, it also means that you have no real foundation to begin establishing your projects and developments.
Regardless of your ideas, establishing a development takes a massive amount of groundwork to get a project in motion. It adds a considerable amount of time to see the end result of your investment and can often come with drawbacks and complications that you hadn’t considered early on.
For example, if a development project ends up taking considerably longer than initially anticipated, this may not only amount to exceeding your perceived labor costs but also interfere with business ambitions in regards to a competitive market.
Vacant lands have quite a bit of similarity to raw lands in that they both offer a relatively clean slate for property use. This land feature can prove to be extremely beneficial in some cases or quite the opposite in others.
The biggest difference that vacant land offers is that it generally has had some sort of human management or has undergone a form of impermanent development. Depending on your intention for your vacant land, this could be either a good or bad feature.
When evaluating vacant lands, please consider the following benefits and risks that come with committing to such an investment.
Vacant Land Benefits
Vacant lands can be found all over the United States in the form of urbanized plots or vast countryside landscapes.
The first thing you should do when on the market for vacant land is established an end goal for your property. This will help narrow down the land features that are appealing to you in regards to your ambitions for development.
Let’s take a look at some of the benefits of vacant lands.
Unlike raw lands, vacant lands have been evaluated to some degree for a wide variety of different beneficial reasons. The first and foremost is generally that the land is located in a valued and favorable location.
It’s quite common to see vacant parcels of land scattered throughout urbanized areas, which have a much higher real estate value than properties located in rural environments. This can greatly increase the potential of buying lands for the purpose of establishing prime real estate projects.
However, if your intention of buying vacant land is simply for the reason of building your own home, you can likely acquire the land far cheaper this way than purchasing an already developed project. While this does come with quite a bit more work, it also gives you the freedom to design your own home within the margins of your personalized budget.
Easier To Flip
Given that vacant lands tend to be located in areas that have more attractive qualities than raw lands, they are often much easier to flip for quick cash or sell back in case you are having second thoughts later on.
When buying property in urbanized areas, the prospect of buying vacant lands simply for the purpose of making quick financial gains offers an abundance of investment opportunities that can either be short-term or long-term.
To secure a form of financial security in such a purchase, you should always evaluate the local market value of properties with the area and search for consistent growth in land costs. If you find that your property is located in an attractive urbanized environment or has significantly valuable resources, it’s easy to correlate the perceived direction of growth for the vacant land.
Farming and Resources
Vacant lands located in rural areas are not always a bad choice when hoping to acquire valuable properties outside of urban areas. Vacant lands are rarely purchased without some form of financial benefit for the buyer, which is why they can tend to be a safer bet than raw lands.
You can commonly see vacant lands that were initially used for farming purposes. This makes for an incredibly useful investment opportunity to either continue utilizing the farm for further income or simply using it temporarily while you establish your developments on other parts of the property.
In addition, vacant lands could have other valuable resources that can amount to huge financial gains such as:
- Natural gas
- Nuclear energy
The farming and resources associated with vacant lands can prove to be an investment that pays for the land itself in the long run or at the very least offer a source of income from the land until you get your developments underway.
Recreation And Property Conversion
A benefit that is synonymous with raw and vacant lands is their versatile potential for recreation and property conversion.
If your vacant land has been relatively untouched, the prospect of converting the property for farm use or a conservation easement is a very viable opportunity. To ensure the environmental value of the soil and other environmental qualities, always conduct an Environmental Impact Assessment before pursuing these goals.
In addition, vacant lands that have qualities that meet the standards for outdoor recreation and other activities can also be pursued. These ventures will need to be evaluated case by case depending on the property features of your vacant land.
Vacant Land Risks
Buying vacant lands does come with certain risks that are not often associated with raw lands. Given the locations that vacant properties can be found in, as well as how the property was used by the previous owner, this can result in drawbacks to buying these types of lands.
Let’s take a look at the risk factors associated with vacant lands.
Since it’s quite common to find vacant plots of land in urbanized environments, your development projects will likely have to comply with the local city government’s zoning restrictions.
These restrictions can greatly vary depending on the city or town your lot is located in, but nonetheless, it will still amount to extra work and consideration being done on your end.
In addition, adhering to zoning restrictions often comes with projects needing additional work to meet city guidelines - which can result in more time and money being spent on development.
To get a realistic figure of what your long-term goals are for your vacant land, as well as your budget for your development, you should carefully evaluate all zoning restrictions that can be placed on your property.
Property taxes are something that raw and vacant landowners can greatly avoid or mitigate when living in rural and undeveloped areas.
However, property owners that live in or own land in urbanized areas have to deal with taxes associated with their property that can range from moderate to significantly high. The best way to determine this is to evaluate the local economy of the area you are considering purchasing your vacant land in.
If the area is urbanized and has a thriving economy, you can expect to be paying a hefty property tax.
Given that the vacant land had a previous owner, it’s important to understand the history of the property and what it had been used for in the past.
It’s not common to find vacant lands that look good on the surface but have some underlying conditions that will not only affect the price of your investment in the long run but could actually jeopardize your developments and ambitions altogether.
Common occurrences for such property conditions are:
- Soil infertility
- Water pollution
- Habitat destruction
- Toxic waste disposal
Depending on your intentions for your vacant land, these conditions can prove to be catastrophic for your development projects. To confirm the quality and value of your vacant land, you should always conduct a thorough inspection and Environmental Impact Assessment of properties you are considering purchasing.
About THE AUTHOR
Brittany has been in the land business since 2020 when the world was starting to shut down because of COVID-19. Since then, we’ve sold to dozens of people from ATV weekend warriors to camping enthusiasts to retired truck drivers. Our inventory spans mostly in the western United States. We’ve been trained by experience, land acquisition courses, and hundreds of hours meeting with county assessors and clerks, zoning officials, realtors, and land investors. We’ve answered hundreds of questions from people regarding the buying and use of land.Read More About Brittany Melling