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Does Lot Size Matter in Real Estate Investment

Does Lot Size Matter in Real Estate Investment

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When buying or building your dream house, the lot size is one of the most important factors to consider. How big a lot you need depends on the size of the home that sits on it. However, it’s also necessary to take into account other aspects. For instance, a big lot gives you the freedom to establish your own haven. It also means that you have the chance to “live off the land” and get close to nature. Many people even consider having a larger lot to be a wonderful business opportunity. Some develop farms and ranches, while others use various strategies to profit from their assets.  
Before you start looking for ways to find my lot size for future real estate endeavors, you should learn some basics regarding how the land lot size might impact your real estate investment and why it’s important.    


Photo by Redd on Unsplash 

Lot Size and Value 

Homes on lots with larger square footage typically have a higher property value than comparable homes in the same neighborhood on smaller lots. However, the value of a larger parcel of land depends also on its location. For instance, while greater space behind the property is more valuable in some neighborhoods, a large front yard is highly valued in others. The lot size rules are also important. A property that is an acre and a half in size won’t be more desirable if everything else in the same area is at least one acre in size. However, if some lots are one acre and some are five acres, the larger plots will probably be more desirable, and, therefore, more expensive. 

How it Matters Regarding Maintenance 

Larger lots can require a lot of upkeep. While you could maintain a large house on your own, you might need heavy machinery to maintain a large plot of land. This means also higher expenses for investing in equipment, but also more energy and human resources. 

Lot Size and Usable Space 

Once a house is constructed on a plot of ground, the land is considered a part of the overall package and is valued accordingly. For example, it’s unlikely that a home on a lot that is 14,000 square feet would be valued more in a neighborhood where most of the houses are on lots around 13,000 square feet. Moreover, if a property has an extra 5,000 square feet of unused space — such as a steeply sloping hillside — it might not be taken into account at all or be detrimental. On the other hand, a home on a considerably bigger lot with more space for building additions such as a guest house, a swimming pool, a tennis court, or other useful amenities, would be worth more. 

Future Uses 

The lot size is especially important if the property has the potential to be divided. For instance, if your community’s zoning requirements imply that the minimum allowable lot size is two-acre and you have a house constructed on the side of a five-acre parcel, you may divide a section of your land and sell it separately.   

Importance for Appraisals and Assessments 

The size of your lot may affect its assessed or evaluated worth. While appraisers look to identify market values for estate, lending assessors estimate property values to determine actual property taxes. Both parties employ comparable techniques, and it’s typical for both appraisers and lending assessors to assign a value to your land by dividing its dimensions by the average price per square foot or acre. In those circumstances, minor variations in your lot size may result in a change in your home’s assessed or appraised value. 


Photo by Olga Subach on Unsplash 

The Importance of Lot Size When Buying or Building a House 

A larger lot size gives you additional space for outdoor entertaining on a deck, patio, or pool, a privacy fence to keep out the neighbors, room to grow a garden or expand your home, and space for your children and grandchildren to run around.   
However, buying a larger lot will probably cost more. In addition, additional acreage necessitates more preparation, and landscaping — all of which add to the overall cost. Moreover, bear in mind that prospective purchasers might not be prepared to pay that much more for the extra land if you decide to sell your house in the future.  


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