Land Owners Frequently Asked Questions
Top 10 Questions from Land Owners
1. What is the development potential for my land?
2. What's the value of my land today?
3. What can I do to enhance the value of my property?
4. What's QDM?
5. How can I manage the timber on my property?
6. Should I try to re-zone my property?
7. Where can I get information on what can I do with my land?
8. What are the tax benefits of owning land?
9. Can I finance the improvements I want to make?
10. Where can I find a lender that understands land?
Top 10 Questions from Land Owners
1. What is the development potential for my land?
Many things to consider:
- Current market conditions and timing
- Access
- Utilities
- Zoning
- Topography
- Wetlands
- Soils
- Proximity to amenities such as water, jobs, schools, recreation
- Differentiation. How could your development be different and more desirable than others?
2. What's the value of my land today?
Value depends on many factors:
- Location
- Condition
- Terms
- Highest and best use
Sources of valuation information:
- County Assessor's office - actual sale data from Certificates of Real Estate Value
- Appraisers
- REALTORS and the Multiple Listing Service
How you plan to sell:
- Whole
- Subdivided
Value added:
- Improvements
- Roads and driveways
- Utilities
- Landscaping
- Structures
- Good forest practices
Highest and best use:
- What use of the property will result in the highest economic benefit? The current use or some other use?
3. What can I do to enhance the value of my property?
Obviously, it depends on the property itself and its location, condition, characteristics and your ultimate plans for the land. Generally, value enhancement falls into a few categories:
- Entitlements
- Development of plans and approvals
- Physical changes to the property and management practices
From the QDMA (Quality Deer Management Association):
Quality Deer Management (QDM) is a management philosophy/practice that unites landowners, hunters, and managers in a common goal of producing biologically and socially balanced deer herds within existing environmental, social, and legal constraints. This approach typically involves the protection of young bucks (yearlings and some 2.5 year-olds) combined with an adequate harvest of female deer to maintain a healthy population in balance with existing habitat conditions and landowner desires. This level of deer management involves the production of quality deer (bucks, does, and fawns), quality habitat, quality hunting experiences, and, most importantly, quality hunters.
By creating quality habitat and following QDM practices, your property value can be enhanced and you can benefit the environment.
5. How can I manage the timber on my property?
The best thing to do is get information. MyMinnesotaWoods.org is one source for information on managing your timberland. If you own 20 or more acres of timberland, you may wish to implement good forestry practices for a number of reasons:
- Financial benefits
- Wildlife benefits
- Forest sustainability
- Forest fire prevention
6. Should I try to re-zone my property?
It depends on the ultimate plans for your property. Rezoning, or gaining entitlements for your property, are important if you believe the highest and best use for your property is different than the current zoning. For instance, if you own land zoned, "Agricultural" and you believe it could be subdivided and sold as 2.5 acre tracts, one of your first steps would be to get the property re-zoned to the proper zoning classification. Getting the right zoning, "entitles" the land for a higher and better use. Understand, however, that others, such as neighbors, may not agree with an attempt at re-zoning.
7. Where can I get information on what I can do with my land?
The governmental agency that handles planning and zoning issues in your jurisdiction is one of the best and first places to check. The knowledgeable staff there can answer a myriad of questions and point you to other resources. Another excellent source of information is a local surveying/engineering firm. Of course, qualified real estate professionals can provide an in-depth analysis of your property and its potential for other uses.
8. What are the tax benefits of owning land?
There are many tax benefits to owning land. Your first approach should be to your accountant or attorney who can provide you with factual, up-to-date information. These are some of the benefits you may wish to take advantage of:
- Investment interest deduction
- Government payments, such as the CRP program
- Tax credits for forestry and agriculture
9. Can I finance the improvements I want to make?
Most banks, savings and loans, credit unions and land specialty lenders are very willing to make loans for land purchases and improvements.
Of course, the amount you can finance and the terms will depend on the creditworthiness of the borrower, the collateral and nature of the improvements.
Investigate with your own lender or contact one of these land lenders.
10. Where can I find a lender that understands land?
For small projects - ranging from a homesite to hundreds of acres, most local banks, credit unions, savings and loans and land specialty lenders can fill the bill. For a large or development project, many local lenders have relationships with larger lenders to structure the right kind of loan package. Or, there are institutional lenders, such as insurance companies, who can finance such projects. Occassionally, there are local private parties who may wish to invest in land financing.
Start with our list of lenders. They're knowledgeable and fully capable of helping to structure the right package for you.
