I received the following in an email recently: “With the current market situation do you still think Whispering Ranch is a good investment”?

Jay and I have a Whispering Ranch page on our website.  and Jay’s blogged about the Ranch.  We love the area with its high desert vegetation, mountains, and views. Is it a good investment?  Is it the next north and east Scottsdale? – Only time will tell.

Being successful speculating in land is sometimes likened to investing in stocks:

Land tends to be a long term investment

Unlike a dwelling that can be rented, raw land often sets empty and does not generate income.  Prices fluctuate more with raw land and financing is *not* always easy to obtain.  When the market for homes begins to slow – land sales may be all but non-existent and tend to take longer to recover.

Do your research

What is the growth potential for the area?  What is the current zoning?  How far away are the available utilities?  What is the water situation?  Is there a flood way or flood plain issue?  There are restrictions pertaining to building in a flood plain and disturbing a flood way.  These restrictions tend to affect the value. Walk the land if possible – a large or deep wash has the potential to be designated a flood way in the future.

Take advantage when the market is down

Not only are the prices lower when the market is slow but sellers tend to be willing to negotiate.  It can be difficult to obtain a loan on raw land.  A buyer may need to ask the seller to finance part of the purchase (called an owner carry back).  When the land market is doing well sellers may not consider an owner carry back – why finance when they can wait for a buyer who has all the money upfront?

Only a small portion of real estate professionals have experience with raw land transactions.  Finding a knowledgeable agent can be a valuable asset in successful raw land investing.