When purchasing land in Texas, one of the first investment decisions you’ll face is choosing between improved land and unimproved land. Each type has its own key characteristics, costs, and development opportunities, so it’s important to understand what fits your goals best.
Keep reading to learn the key differences between improved and unimproved land, and find out which one is right for you and your development plans.
Key Takeaways
- Improved land has at least some of the required infrastructure and utilities needed for construction or immediate use. So, if you want to start building soon, you might consider buying improved land.
- Unimproved land typically has limited access to basic infrastructure, and it’s not fully equipped for development purposes.
- Financing unimproved land is usually more expensive and has stricter loan requirements compared to improved land, which may have a higher purchase price.
- A land developer like SRC Land can help you make informed investment decisions and choose improved properties that match your needs.
What Is Improved Land and Unimproved Land?
Improved land refers to a property that has undergone development to make it more usable or of higher market value. This usually means the developed land has paved roads, utilities (including water, electricity, and sewer), fences, or landscaping. Improved land may also include properties with structures. Improved land is often easier to sell or build on because some development work is already done.
Unimproved land, on the other hand, is undeveloped land that has some basic infrastructure, such as access to nearby roads, but has no utilities and is not fully ready for construction. It’s more developed than raw land, yet it still requires some work before you can build on it.
Development Considerations for Improved and Unimproved Land
When comparing improved vs. unimproved land, it’s important to understand that each type comes with its own challenges and opportunities. Regardless of which one you choose, knowing the development considerations will help you plan effectively and set realistic expectations.
Below is the development process for each:
Improved Land
- Assess Existing Infrastructure – Check the condition of utilities, roads, and any existing structures to determine what upgrades or repairs are needed.
- Get Financing – Securing financing for improved land is often easier than getting financing for unimproved land, though there may be higher initial costs for buying the property.
- Developing a Plan – Create a plan for future development on the property, including a budget.
- Obtain Permits and Approvals – Any renovations, expansions, or new construction require permits. You’ll need to consult with local authorities to make sure your plans comply with zoning regulations and building codes.
- Upgrade Utilities and Infrastructure – Improve existing systems such as water, electricity, sewage, drainage, and road access to make the land ready for building or other projects.
- Final Inspections and Compliance Checks – Once everything is complete, conduct inspections to ensure that all the improvements meet local building codes and regulations before the property is ready for use.
Unimproved Land
- Conduct Due Diligence – Before developing, it’s important to check zoning rules and confirm legal access. Also, consider the land’s slope and drainage to determine if they can be utilized or require removal.
- Secure Financing – Unimproved land often requires additional financing stress and risk tolerance. Land loans cover the purchase, while construction loans cover the cost of infrastructure and building. Sometimes sellers offer owner financing as a flexible option.
- Develop a Site Plan – A clear site plan clearly shows where buildings, roads, and utilities will be located. It also helps manage drainage and sets aside space for landscaping.
- Obtain Necessary Permits – You need permits before building. These can include building permits, environmental approvals, utility connections, and demolition permits.
- Prepare the Land – Preparing land involves clearing debris, leveling the ground, and digging for laying foundations and utilities.
- Conduct Final Inspections and Obtain Approvals – After construction, inspectors check that the buildings meet the necessary codes. Any issues are resolved, and certificates of occupancy or completion are issued, allowing the property to be used or sold.
Improved vs. Unimproved Land: Investment Strategies
When it comes to land investment, both improved and unimproved properties can be profitable, but they require different strategies. Here’s how to make the most of each type:
Investment Strategies For Improved Land
- Leverage Existing Infrastructure for Marketing and Value – Use what’s already on the property to your advantage. When selling or leasing, advertise the roads, power, and water connections. Buyers love “ready-to-build” properties, and that can help you sell quicker and for more.
- Plan for a Faster Return on Investment – Improved land already has what you need to build or lease, so you can start earning faster. Plan how soon you want to return it, which’ll help you decide whether to hold it or flip it quickly.
Investment Strategies For Unimproved Land
- Diversify Land Use for Early Returns – With a little development, you can lease the land for farming, parking, or storage. This will generate a small but steady income that can offset holding costs.
- Target Developing Areas – You can buy land in areas where government or private developers plan to expand roads, electricity, or housing. Getting in before infrastructure arrives often means a stronger appreciation in value once development reaches the area.
Your Financing Options for Improved and Unimproved Real Estate
When it comes to financing options for improved or unimproved land, the requirements and costs vary greatly. Unimproved land is typically affordable. However, it may come with stricter lending requirements because it lacks some infrastructure and is not ready for construction.
Improved land, on the other hand, which has access to utilities, is generally easier to finance through traditional loans and may offer better terms. For both types of land, there are special loans for different budgets and investment goals.
Sellers may also offer owner financing options to make purchasing land more accessible and convenient to buyers.
SRC Land Can Help You Find Improved Texas Land for Sale
If you’re comparing improved land and unimproved land, it’s important to consider your long-term goals and how soon you plan to start building. Improved land already has essential utilities and infrastructure in place, helping you save both time and money as you move forward with your plans.
To find affordable land in Texas, SRC Land is here to help. Our team will guide you through every step of the process and help you choose the right Texas land for sale that fits your goals and budget.
