When it comes to investing in real estate, buying land has always been a popular option for investors.
You can buy three major types of land in Ontario; crown land (land owned by the province and only available for rent or purchase for projects that provide socio-economic opportunity to Northern Ontario communities), vacant land (land with utilities available but not yet developed), and raw land (land with no buildings, roads, or utilities).
While some people buy land for immediate development, others purchase it with the aim of letting it increase in value over time. However, the big question is, ‘Is buying land in Ontario a good investment’?
Here are some factors that will determine whether land in Ontario is a good investment or not:
Type of land – Raw land is the most affordable option, but it requires a lot of work. You will have to connect utilities and services or install them yourself in case municipality services are not available. Building physical road access, a septic tank, or a water supply well can be very costly. Though vacant land is more expensive, it is much easier to develop and get financing for
Accessibility – Is the piece of land in an up-and-coming area? Is it located close to good schools, hospitals, major highways, or malls? Land that is accessible appreciates much faster over time.
Price – A recent report revealed that land prices have been increasing steadily over recent years. To enhance your chances of a good return on investment, be sure to do your homework before investing in land
Taxes – When buying land in Ontario, you will be required to pay land transfer tax. In addition, you will have to pay property taxes even if you have not constructed a building on the land. Get familiar with the taxes required to determine if your investment will be profitable.
Soil quality – Soil quality is a crucial factor to consider before buying land. Be sure to conduct tests to find out how water drains through the soil. If the soil is of poor quality, it might be hard to build any kind of structure on it
Zoning – Zoning determines how land can be utilized and what structures can be built on it. Purchasing land in an area with unfavorable zoning laws can easily derail your plans for future development. Therefore, take time to research the existing laws in the municipality where you are planning to buy land.
Conclusion
Though buying land can be a profitable investment, it comes with many potential risks. To avoid the pitfalls of land ownership, consider working with professionals that understand the real estate market. At Regalway Homes, we specialize in helping our clients make the best land purchase decisions. Leave us a message, and we will get in touch with you.