Issue link: https://viewer.e-digitaledition.com/i/1498526
6 • Over-customizing. "Making custom improvements that are too unique and specific to your interests can limit the number of people who would be interested in purchasing that property in the future," says Ablondi. • Over-improving. "The larger the property, the cost of improvements can be spread over more acres," says Perez. "But as a general rule, improvements unrelated to the property's use should not exceed 20% of the land value." He notes that if a buyer wants to add a dream home, one option is to position it on the property so it can be sold separately, if necessary. • Generalizing values. Strong says buyers need to understand that different types of land — even within the same category — have different values. One example is looking at comparable sales prices for similar farming operations. "Values can vary based on soil quality, productivity, and other characteristics." Despite the many advantages of owning land, spreading risk by having a balanced portfolio is a sound long-term strategy. "When you buy stocks and bonds, you're buying a piece of American business," Strong says. "Stocks can give higher average returns over longer periods. When you blend land and traditional financial investments, you get less volatility and higher potential return over time." from the land sale may be eligible for a 1031 tax-deferred exchange, a benefit that does not apply to traditional financial investments. ADVICE FOR LAND BUYERS Purchasing land can be a significant investment, so buyers should be well-informed before making a decision. Researching land-exclusive real estate agents is an important first step. "Share your criteria and ask about their experience, how many properties they have sold, and for references before making a decision," Perez recommends. "You are hiring that person to find the next dream property of your lifetime. Be sure that the agent is knowledgeable and someone you can trust." Strong notes that buyers can also seek input from other professionals with a proven record of success in buying and selling land. "The resources are endless, but be careful. Make sure you rely on people with good intentions who give you good advice." The land experts at Whitetail Properties also share common mistakes to avoid when purchasing or improving land: • Rushing into an investment without fully understanding the costs of buying land, such as debt service on a loan and taxes. "Land is often an emotional purchase, and buyers may not realize the full cost and purchase beyond their means. It's hard to enjoy something if you have trouble paying for it," Strong says. You are hiring that person to find the next dream property of your lifetime. " "