When it comes to buying property, single-family houses seem to get all the glory. They tend to get the most advertising attention, yet there’s another property-type that can be an ‘unsung hero’
when it comes to investing in the real estate market.
Residential vs Commercial
Residential real estate is markedly different from commercial real estate, because these land-types suit completely different needs. Once you know these crucial differences, you will be better equipped to decide which avenue might work better for your particular investment portfolio.
Residential real estate is typically singular in its allowable use, which is to accommodate residential construction and subsequent habitation. The differences in residential land types relate to that lot's ability to accommodate density. Some land will be zoned for single-family usage only, some will accommodate the development of townhomes or condos, and some have multiple allowable uses. When looking at property for sale in your local area, such as land for sale in Vernon, be sure to check the zoning bylaws as you go. You also want to be sure that even if the zoning is consistent with your needs, that the lot will allow for the size of dwelling(s) and outbuilding(s) that you intend to construct.
Commercial real estate in most real estate markets, including in the Okanagan, is subject to a more focused and directed due diligence process. You not only need to be double checking the zoning bylaws to ensure your uses are approved (as well, there are far more commercial designations than residential!), but you also need to be aware of the foot and vehicle traffic and how that relates to your business. As well, commercial real estate purchases may require a higher down payment than your typical residential lot. Be sure to check-in with your financial advisor and trusted Realtor® to know where you stand before commencing any type of search process. It is important to note too that commercial real estate, for the purposes of this blog also includes land for sale approved for industrial use.
Key Benefits of Investing in Vacant Land
Highest and Best Use
When it comes to developed land, you’re often severely restricted in the control of what’s called the “highest and best use” of a property. For example, if you buy a residential property with a house that’s situated on that land in an unfavourable way (ie. A house that sits near the back of a lot, restricting your ability to have a backyard) it would not be financially savvy to change that. It would simply be too costly. When you own the land however, you can ensure that you control the best way to use that property from the beginning, thus positively affecting your future investment prospects.
When you purchase previously-developed land of most kinds, upon conveyance you will likely have immediate overhead. If the commercial property you just bought needs a complete renovation, you will still be subject to things like electricity and hydro bills while you renovate. With vacant land however, you save a great deal in interim overhead. This can bring peace of mind to costly projects, allowing you to focus your time and energy where it most matters: getting the most out of a particular property.
Lower Barrier to Entry
While vacant land sometimes does require a larger down payment than your typical residential purchase with a mortgage, it is still a lower barrier to entry than buying previously developed land overall. Because there is no structure to deal with, you save a lot of money in mortgage interest and other things, like mortgage origination fees. This makes vacant land a great investment for those that do not want to expose themselves to debt at this particular point in time.
Buying Vacant Land in Vernon & The Okanagan
Speaking from past experience and statistical validation, investing in land in the Okanagan has proven to be an excellent opportunity to diversify your investment portfolio. Okanagan land for sale is increasingly sought after in national and international markets because of the unbelievable potential for future growth. Our beautiful valleys are becoming less and less of a “best-kept secret” and this is attracting worldwide attention.
Our cities are densifying, particularly in the Kelowna market, which has a ripple effect on zoning bylaws throughout each city and the valley as a whole. Vernon has the unique position of having the most development potential in terms of available land space, bringing both opportunity and unique challenges. Why not meet these challenges by jumping in and becoming a part of this tremendous growth?
9159 Smith Road
This is a stunning waterfront lot with so much potential. With 114’ of waterfront, it is nestled between two homes that set a beautiful standard for the street. It also has sewer nearby available to connect to and has two titles! Follow this link for more information!
Investing in land is a brilliant way to catch the sustainable wave of business flowing into our communities. We all have a desire to have an impact on those around us, and vacant land is a particularly good way of being able to be a force for good here.
Our real estate markets in the Okanagan are resilient and boundless in their opportunity. Be a part of this opportunity by considering vacant land to be your next investment purchase!
Your trusted Vernon Realtor®,
Louisa Cochrane PREC