If you’re considering investing some of your funds to acquire new construction as a rental, it’s likely you’ve done your homework and noticed certain trends that indicate a market demand for the area and specific demographic shifts. A major employer announces a relocation near your city for exampleraw land as an investment would drive up the price of existing real estate and create a demand for more housing.

But perhaps you’d like to get a further jump on recent trends. Maybe you’d like to buy raw land in anticipation of building later or flipping the property to an eager developer? What are some of the things you should know before investing in raw land?

Raw land is less expensive. The property taxes will be low because there are no improvements on the land. Property taxes go up when the house is built and remain low because the lot currently has little value. You may find that paying cash is your ideal method of acquisition due to the lower prices but if you do intend to finance raw land be prepared to have a down payment ranging anywhere from 30 to 50 percent.

Don’t expect to flip raw land 60-90 days after you’ve bought it. Land is more speculative compared to an established neighborhood. Be prepared to hold onto the investment longer than a finished structure. Home values in and around metropolitan areas tend to fall the further away from the downtown business district you get. There are of course exceptions to that rule but generally speaking, that’s where new construction starts, on the outskirts of the city rather than tearing down an established community.

Builders and developers in general have staff that follows economic announcements such as new employers moving to the area or a new road being built that will help commuters as they drive to and from work every day. You won’t have that available to you but if you see new developments trending toward a specific geographical area, you may want to pick up a lot or two in anticipation of further expansion. Again, you’re not going to make $30,000 in 30 days with raw land, but if you can get the property at a relatively low cost and have a bit of patience, you’ll find your reward a bit further down the road.