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Real Estate: Which Costs More--Developing Undeveloped Land Or Redeveloping Previously Developed Land?

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As a beginning investor in real estate you are looking at all of your potential investments. There are lots of different kinds and types of property, and you want to know what would cost you the least to prepare for the greatest sale. Searching for information, you could run into a lot of mixed messages about what to buy and how much to buy. To confuse matters further, you can invest in either undeveloped or previously developed property, but which is more expensive? The following information will help you decide.

Previously Developed Land

The pros of previously developed land are:

  • it is already zoned for specific development uses.
  • it already has sewer and plumbing connections built in.
  • you can reuse/remodel/revitalize the buildings or homes already on it.
  • you will save money by using what is already installed and available to you.

The cons of previously developed land are:

  • you have to bring everything up to code before anyone can inhabit or work in the current property buildings.
  • you will have to level and remove buildings if you want to rebuild to suit your intentions.
  • you may have to evict tenants, if there are any.

​With the exception of demolishing and rebuilding, this type of real estate investment is cheaper than starting from scratch, but most real estate investors do not leave properties "as is." Improvements are almost as costly, if not equally as expensive, as undeveloped properties.

Undeveloped Land

The pros to purchasing and developing undeveloped land are:

  • you can build virtually anything you want on it, so long as it is in compliance with the zoning laws.
  • you can structure the plumbing and sewage lines that work with and not against your architectural plans.
  • the property costs less up front than previously developed land with structures on it.
  • once developed fully, the property could yield quite a profit, depending on what you build on it.

The cons of investing in undeveloped property are:

  • you will have to hire several different construction contractors for building, plumbing, excavating and electrical needs.
  • a building inspector will have to follow you around during several appointments to make sure everything is in line with your area's building codes and fire codes.
  • the price of your insurance on your property will continue to rise with every structure you place on it.
  • you will have to hire landscapers to clear the land of weeds and unwanted trees, as well as level it prior to excavation.

Generally, undeveloped land/property will cost more because of the numerous contractors and specialty workers you will need just to make the property livable and functional. However, having all modern and brand new buildings and homes works to your resale advantage, and you might turn a higher profit than if you revamp previously developed property.