Raw vs. Developed Land for Sale in Lake Havasu City, AZ: A Comparative Analysis

Most Lake Havasu City investors favor developed properties when searching for commercial real estate assets. They see significant potential to profit quickly from the area’s growing economy and tourism sector. However, there is potential for investing in raw land, and ignoring its investment potential would be a mistake. Understanding the differences between raw and developed land for sale in Lake Havasu City, AZ, is critical. That understanding will help you make the best investment decision. This post explores key differences between these real estate investments.

Investing in Developed or Raw Land for Sale in Lake Havasu City, AZ: Which is Better?

Initial Investment Costs

Raw land is typically much cheaper to purchase if you’re talking about cost per acre or square foot. Due to existing structures and amenities, developed properties have higher purchase prices but are often easier to finance. Lenders generally view them as safer since they can generate immediate income. It is important to note that due diligence and property valuations can differ significantly for raw land vs. developed properties.

Income Potential

Income potential is one of the key factors that draws investors to developed properties over raw land. Investors can generate steady cash flow from tenants in multi-family properties, retail centers, or office space. Businesses associated with the property also generate revenue. Conversely, raw land rarely delivers quick income. Investors typically rely on long-term appreciation or strategic development.

Developing or Improving the Property

Developing raw land requires significant investment in infrastructure, including roads, utilities, drainage, and zoning compliance. Permits, environmental impact assessments, and construction costs can quickly add up. There’s also a greater potential for unexpected delays to increase costs and timelines. Developed properties require less intensive work. You may need renovations or upgrades, but most of the infrastructure is already in place. Adding value to developed land is typically less expensive.

Time Considerations and Appreciation

With more significant potential for immediate income, developed properties have a shorter investment horizon. They can grow value from property upgrades, operational improvements, and market demand. Conversely, raw land normally requires a longer timeline. Appreciation depends on factors like urban expansion, infrastructure projects, and zoning changes. Strategic raw land investments can see significant appreciation. However, patience is key since these factors typically unfold over long timelines.

Ownership Expenses

Ownership costs vary between raw land and developed property. Raw land has lower ownership costs with less maintenance and lower property taxes. However, costs can increase if development is part of the plan. Developed properties, while offering income potential, come with higher costs. Property taxes, insurance, maintenance, and management fees can add up quickly. There may also be additional operational costs if you operate the property as a business. However, business revenue may cover these costs.

Are you interested in commercial land or other real estate investments in Lake Havasu City? The Shuffler Commercial Real Estate team is your expert guide. Reach out now to learn more about our services.