• Be aware of the pitfalls of purchasing raw land.Countryside land image by Rose from Fotolia.com
  
  Raw land is land that is undeveloped with no structures or utilities. Purchasing raw land to build a home or business can be an exciting project and investment. It allows you to design everything to your specifications and to work with the surrounding landscape. Despite the advantages, there are several pitfalls to consider when buying raw land.
  
  

Financing

• Although raw land is often available at a low cost, obtaining financing to purchase the land can be difficult. According to "Making Money in Real Estate," this is because raw land is not guaranteed to bring in income if the owner fails to develop the land. In addition, raw land may also be more difficult to sell for the same reasons.
  
  

Income and Taxes

• Developed land can immediately bring in rental or business income. Raw land, on the other hand, offers no options for immediate income. When you purchase raw land, be sure that you will be able to make loan and tax payments on the property. In addition, raw land does not allow for federal tax deductions, as it does not depreciate.
  
  

Zoning and Permits

• The municipality in which the land is located will determine how the property will be zoned and may prevent you from zoning the land for your desired use. For example, a municipality may zone an area for agricultural use only and prevent you from making a housing development. Find out what the zoning is and if you can change it prior to purchasing the land. Also check the municipalities development plans. The surrounding area may be included in plans for highways or city expansion. In addition, you will need to obtain building permits to improve the land and these may take time to obtain.
  
  

Development

• Although the raw land may look suitable for development, it may require extensive work before you are able to build. For example, there may be hazardous materials in the soil, the land may need significant leveling to support roads or it may not have access to fire services. In addition, you will need utilities for your property. If there are not utilities nearby, you may have to pay to have pipes extended to your property. You will also have to wait for public works to provide utilities, which may delay the development of the land.