Understanding how to buy vacant land
The idea of purchasing a piece of land and building your dream home is a dream for many people. But what is involved in purchasing vacant land whether building your dream home, or even for an industrial or commercial property development.
The four big banks here in South Africa (ABSA, Standard Bank, FNB and Netbank) will only consider financing residential vacant land if the land is 120sqm or larger and within a proclaimed suburb. And when they approve finance, the maximum loan will be for 60% of the value, so a 40% deposit is required, and the loan term is only 60 months.
So with this in mind, as an investor you need to be financially sound. You need to ask yourself if you have the cash flow for the land purchase and the further development of,. “The process of buying vacant land takes careful cash flow planning,” adds Charlotte Vermaak, Chas Everitt Nelson Mandela Bay’s principal. “Depending on your intended plans for the development of the vacant land, banks typically offer finance systemically as a particular building project progresses.”
Consider the costs of maintenance
When reviewing the costs associated with the purchase and development of vacant land, you need to include land survey costs, maintaining the land to an acceptable standard and obtaining a building permit.
“If your building plans do not comply with zoning restrictions or you want to apply to have the land rezoned from, say from residential 1 (single dwelling) to residential 2 (turning a home into a guest house), there are further costs and valuable time involved in getting approval from local authorities,” adds Vermaak. “And in property development, time costs money and it needs to be factored into your budget.”
Location’s as vital for land as it is for a built property
Before investigating any vacant land for sale, it is important to clearly outline your objectives for the vacant land you’re purchasing. Is the land close to transport links and major routes?
Blue Horizon Bay, on the outskirts of Port Elizabeth, is a nature conservation area, offering amazing panoramic sea views, beautiful sandy beaches and scenery. The ideal spot to spend your retirement, or just to escape to for family holidays. For R340,000 you can purchase 1,103m2 of land to create your own dream property. Find out more.
If you’re a budding property developer, for R1,268,000 you can purchase 3,432m2 in Windsor Park, Despatch. Despatch is a great area to invest and develop property as property prices are more affordable for many compared to Port Elizabeth and is close to one of the region’s largest employers, Volkswagen.
Love more Place, Port Elizabeth, has grown to be upmarket, and has priced many out of the area. But, there are still a handful of plots available in this in-demand area. Close to amenities, this 609m2, north-west facing plot over-looks the lake, and is close to local amenities.
For more vacant land options, visit www.chaseveritt.co.za.
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