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The dream of homeownership is a dream for many Canadians. Homeownership, in a true sense, includes building a brand new home from the ground on their own land and not purchasing an existing home and making changes over time. For investors, buying land in Canada, and especially in Ontario, is an enticing offer notwithstanding whether they build the house and sell it or hold it for the rising market.
But, the question for many of us is, is buying land in Ontario a good investment? What do the experts say? Let’s find out.
Is Buying Land A Good Investment in Canada?
As a rule of thumb, investing money in land is always a valuable commodity to consider.
Most investors purchase vacant land for immediate development; others buy it with the intention of letting the value grow over time. One more possibility is to purchase land close to your own home and wait for its value to increase.
If you are considering buying land, here is expert advice to help you with your decision.
1. The land is not static but flexible investment
When you invest in a piece of land, the opportunities of getting a return are endless. If you have always dreamed to build your house, you can hold it for a longer time to increase value. Once the value appreciates, you can sell it to a developer. If you don’t want to build a house, you can raise cattle on it, as it will keep giving you a monthly return.
2. A great retirement plan
Are you worried about your retirement and how will you survive when you cannot work? Consider buying land. Until you are retired, you can rent this place for a fixed monthly price. So, owning land in Canada is the best investment one must consider in helping one’s personal finance.
3. Freedom with your investment
Some investment methods can be quite restrictive. For instance, with the stock market, you only have the option to buy or sell. However, with land, you have the freedom of using it in any way you want. You can use it for your passive income, while it keeps appreciating its value.
Now, once you know buying land in Canada is a good investment, it’s time to know few important things to keep in mind to make your investment go smoothly.
Here a few things you need to keep in account – only if you want your investment to be right for the long term.
Buying Residential Land in Ontario
First thing first, make sure the title is clear no matter you are buying land in Ontario for residential or commercial purposes. A land that has liens attached to it can end up coming back and haunt you for years once you close. To make sure you do not have to go through any untoward experience, get all of the paperwork connected from an attorney while purchasing land.
Buying Vacant Land in Ontario
Distance and access to services is the second thing you must consider when buying land in Canada. Things which you must check include: Is there a water supply from a local municipality or provincial entity? Will you be operating on a septic tank system and freshwater well? Are the items in place already or you will have to install them if you want to make improvements on the land?
Buying Commercial Land
Important questions to consider are: What is the zoning on the land you want to purchase? Do provincial laws limit you in any regard? If you want to build a single-family home on it, does the zoning permit it? Along with these questions, know also that in some residential zone areas, only multi-family buildings are allowed. This is a vital factor to consider before you buy any land.
Understanding land values are important when you buy vacant or raw land in Ontario. These factors include but not limited to nearby access, transportation, highways, public places, and the value of the acreage you plan to purchase. If you do not live in Ontario, you can enlist the advice of a residential or commercial real estate agent. This might add a little more cost to your budget but this fee can end up being much less than the amount you will lose from making a poor investment decision in a plot of land that you end up being unable to sell.
Down Payment for Buying Land
When you are buying a house on the land, you generally have to put at least a 5 percent down payment. This amount can be 20 percent if you want a loan without mortgage insurance. For the sake of one line answer, when you are taking a land loan, expect to put between 25 to 50 percent down payment.
This difference depends on the policies of the lender, the piece of land in question, and the uses that you have in mind for the land. There are different ways to purchase land if you do not want to pay the required down payment.
You May Also Like: A Complete Guide to Debt Settlement in Canada
5 Tips to Buy Land in Canada
1. Hire a Professional
A real estate agent can be your valuable asset when it comes to buying land in Canada. The purchase of vacant land and the purchase of an existing home is very different. Make sure you go with the pro, who knows the industry well and can help you in purchasing land in Canada.
2. Look Nearby Places
The value of a land depends pretty much on its surrounding. So, when you are buying land, make sure there are enough opportunities around it to grow the value.
3. Be Familiar With Zoning Laws
Make sure you fully understand the zoning laws of the area you are buying in before you buy. Getting zoning permits is nearly impossible and depends on where your land is. Also, there can be restrictions that get in the way of your building plans.
4. Take Environmental Test
The test of soil and water, conditions on your property, and climate matter a lot in increasing the value of your land. So, having an environmental test done can save you from making a poor investment choice. An environmental test can also test for the potential of a disaster such as flooding. Make sure you take into account all of these things before making your move.
5. Look for Better Utilities Around
When building a home from scratch, make sure to take into account utilities such as water and power access. Roads are also an important factor to consider. This if you are buying in a remote area, you need to be more cautious.
The Bottom Line
At Lionsgate, we specialize in helping people obtain funding private mortgages for land purchases as well as for other real estate transactions. If you are looking to buy land in Canada, leave us a message and we will try to connect you with local realtors and sourcing for financing.