As you analyze real estate investment opportunities on a more frequent basis, soon it begins to clarify. It’s not as confusing as it was initially. Instead of trying to evaluate a potential flip all at once, which is the novice’s first response, you learned that it’s a process. Complete A before moving to B. Finish B then move to C, and so on.

 As it becomes more familiar soon you’re able to determine a fair offer, repair costs and use comparable sales for similar properties in the area to arrive at a potential sales price. You’ve got a pretty good idea of what you can expect to make and how long it will take you to make it due to the surrounding real estate. But what if there aren’t any recent sales? What if the property you’re considering doesn’t have a proven market, should you walk?

That’s often the case when a parcel of raw land comes into the picture. Buying any unimproved property can be extremely speculative as the buyers will likely be developers or builders wanting to build a spec home. Yet if you can get the raw land at a super low price that doesn’t crimp your finances, should you consider it?

First, consider everything. But with raw land, there are a few more questions that need answering. First, where is the raw land located? If the raw land is rural and far away from any development of any significance, it’s best to keep your money in your pocket. Yet if the undeveloped lot is near other subdivisions or there’s a new thoroughfare headed that direction, you may want to take a closer look.

The best opportunities when speculating in raw land come from tax lien sales and a bank’s REO department. There’s little demand for raw land compared to improved property so you won’t have as much competition when bidding. But if you can buy a property well below the assessed value and you can risk losing the money, it’s very near like investing in the stock of a promising company. You can afford a certain level of risk and if the company succeeds, it was a wise move. If they fail, well, better luck next time.

Don’t discount the idea of undeveloped property. If the lot is near other improved property and in an area where growth is imminent, it might be something to explore.