The Trusted Home Buyer Logo602-456-4440

The Hidden Costs of Owning Vacant Land In Phoenix

a person smiling for the camera

Martin Boonzaayer

April 12, 2020

Vacant land can be a truly rewarding investment. Vacant land can also have hidden costs; maybe right away, maybe in the long run. There are annual taxes and potentially property owner’s association fees to consider, not as many tax benefits, cash flow, and property maintenance issues, and market conditions to consider. Call The Trusted Home Buyer at 866-488-9923 to discuss the hidden costs of owning vacant land. 

Annual Cost

Purchasing vacant land might not be as expensive as buying a house, but don’t forget about the annual taxes! Depending on the location and zoning of your land, the taxes might be a few hundred dollars or a few thousand dollars. If you hold onto your vacant land and don’t do anything with it, you might end up paying double or triple what you did for the land in annual taxes and have nothing to show for it but the same piece of vacant land. 

Another potential annual fee is the property owner’s association fees. If you purchased land in a community with an association, these fees might also be a few hundred or a few thousand dollars a year, depending on the type of community and the services they provide and what amenities are available. Also, keep in mind that there might be public utility expansion or other special municipal projects that could be added to your annual tax bill that may or may not improve your land directly.

Tax Benefits

Owning vacant land is a nice investment asset, but it has fewer tax benefits than owning a single-family home or a commercial property. There is no depreciation to claim on your taxes, and vacant land does not usually qualify for any type of homestead exemption on your tax assessment.

Cash Flow

Another hidden cost of owning vacant land is negative cash flow. You do not have a structure to rent out and collect monthly payments. Depending on the zoning of your vacant land, you might be able to recoup some of those annual tax fees by using your vacant lot as an extra rental space. You might want to consider purchasing property owner’s insurance if you do anything like this. If something happens to someone on your property while moving or occupying your vacant land, they might file a lawsuit against you. That would be a huge cost for you.

Property Maintenance

Owning vacant land can also become costly to maintain. If your property is in a municipality, they may require you to keep your property mowed. If you have a lot of trees, they may require you to clean up the brush to guard against fires. If your vacant land isn’t in the best of areas, some dumping might occur on the property, turning it into a miniature landfill! This trash and garbage might cause you to have code violations and can be costly to have it removed. There may also be unknown contaminants or toxic issues on this land that you are unaware of, but once discovered, this might also be costly to clean up.

Market Conditions

Owning vacant land in Phoenix for too long can be a big mistake. If you buy your property while the market value is high and hold onto it for a long time, the value might decrease more than you expect. Depending on your purchase price, it might cost even more than your annual taxes to hold onto it year after year. You might also be losing hundreds of dollars of market value. 

No matter what your situation, if you own land in Phoenix, AZ, call The Trusted Home Buyer at 866-488-9923 to discuss the hidden costs of owning vacant land and what you can do about it.

Explore more

May 26, 2023
The Ugly Truth Behind "We Buy Ugly Houses": A Critical Review of the HomeVestors Franchise

In the world of real estate investment, the "We Buy Ugly Houses" franchise operated by HomeVestors of America has gained significant attention. With a promise to help homeowners out of difficult situations and improve communities, HomeVestors presents itself as a reliable solution for selling unwanted properties. However, recent investigations have shed light on unethical practices […]

Read More
May 11, 2023
Can You Sell Your House with a 20-Year-Old Roof?

The short answer is yes, you can sell a house with a 20-year-old roof. But the buyer will most likely use the condition of the roof to negotiate the terms of the sale. Selling a house can be a daunting task, especially when there are issues with the property, such as an old or damaged […]

Read More
April 10, 2023
Tips on How to Sell a Damaged House in Arizona

Are you struggling to sell a damaged house in Arizona? Finding a buyer willing to purchase a property that requires significant repairs or has suffered structural damage can be challenging. However, you can still sell a damaged house in Arizona with the right strategies and approach. In this post, we'll share some tips on how […]

Read More
March 21, 2023
How to Avoid Buyers Remorse When Buying a Home in Arizona

Buying a home is a major decision, and it’s not uncommon to experience buyer’s remorse after making such a big investment. It’s easy to get caught up in the excitement of purchasing a new home, but it’s essential to take the time to carefully consider your options before signing on the dotted line. This article […]

Read More
The Trusted Home Buyer Logo
Copyright © The Trusted Home Buyer
WE BUY HOUSES IN:

4.7 63 reviews