You’re ready. You have a plan. You have a price range. You even have the funds. Do you buy a developed property — a house or a condo? Or do you begin investing in land? This is a decision that needs to be anlayzed as many real estate investors often are faced with this moment in their Real Estate investing careers.

When getting ready to bid on Florida real estate, it’s easy to become overwhelmed. After determining your needs and narrowing your options, it’s still challenging. No home is perfect. That’s why investors often choose to begin investing in land rather than developed property. Sometimes they feel the best way to offer the features buyers demand is to build from scratch. This can attract the highest offers and the best return on your investment. Others buy land knowing that if it’s in an ideal location, they can profit by just holding it — without making improvements. If you are considering investing in land, know the risks. Recognize the cons as well as the pros.

There are advantages to buying a preexisting home:

1. Convenience

Buying a developed property is fairly straight forward. You may be able to view the home before bidding; (only from the outside) you’ll have a fairly clear idea of what you’re getting into.

If you plan to build a spec home on a vacant lot, then investing in land means eventually filing for permits, enduring environmental reviews and hiring a contractor. It means inviting a whole crowd of new people into your life.

2. Location

The most popular neighborhoods are often ideal for quick returns. If the world is already beating a path to your front door, it’s easier to sell the house the door comes with. Unfortunately it’s very difficult to find a vacant lot in your ideal location that’s also being auctioned. Developed property is far more common in popular areas — especially near the coasts. In the most desirable areas, owners of undeveloped parcels often hold onto them for years, even decades.

3. You can get a loan

Of course if you already have available funds, this isn’t an issue. Still, even if you are bidding on a developed property with the intention of flipping it for profit, there are loans available. Buying land usually means paying cash.

4. Neighbors Are Your Friends

If you have the opportunity to examine a developed property, its neighbors are an invaluable resource. Of course you can uncover a wealth of information online. Still, folks on the block may be privy to all sorts of inside info. They can tell you about periods of time when the neighborhood endured abandoned homes or when the house you are bidding on was illegally occupied. When you buy land those same neighbors might be an obstacle. Experts recommend you don’t even speak to them before making your purchase. “All they’re doing is gathering information to use against you,” explains Neville Graham, a Realtor specializing in land sales and associate partner for Partners Trust in Beverly Hills, California.

If the undeveloped parcel provides an unobstructed view or creates a park-like setting, they might litigate. If the construction of your dream home creates noise, traffic or other inconveniences, they might never forgive you.

5. Running water, indoor plumbing, electric lights

If you buy land, you may be on the hook for hook-ups. Depending upon the location, undeveloped properties can lack electricity, sewer connections or reliable sources of clean water. Buying a developed property means it comes with all those modern conveniences!

Of course, there are advantages to buying undeveloped property

1. Build to suit

When you buy land you can construct the perfect spec home. Developed property comes with compromises. In order to profit, you’ll first have to renovate the five-bedroom house with a single bathroom or the kitchen barely suitable for cooking toast.

2. A Healthier Choice

Older homes often contain frightening amounts of toxic chemicals, flammable material and other nightmares that modern building standards avoid. “A new home is less likely to have the health concerns or toxic materials of an older home – things such as asbestos, lead paint, mold, etc,” says Guy Burtt, principal with Riverstone Development Group, Inc.. When considering Florida real estate, you need to consider the risk of tornadoes or hurricanes. Older homes may not have the resistant features you need. Remember, if you buy an older property at auction you will most likely have to bring it up to code in order to flip it.

3. Lower Energy Costs

Buying land and building a marketable “spec” home means installing the most energy efficient appliances, the best heating, ventilation and air conditioning systems. You can hire a contractor who specializes in “green” construction. This will go a long way to marketing the property as perspective buyers increasingly demand these features.

4. Fast Cash

Of course, investing in land and developing the property takes time. Sometimes you can make a profit by doing very little. If a property has multiple bidders, it’s a good sign of interest. It means you may be able to sell at a profit a short time later. Some experts recommend offering financing — which increases the pool of potential buyers and increases your profit as you earn interest. If the land is completely undeveloped, you can do a few simple things to improve its appearance. “I cleaned the property and outlined a possible driveway by laying out some dead trees,” Steven Gillman explains, describing the first piece of land he bought when he was 20. “Starting from a survey marker in the corner, I put sticks along the boundaries and painted the tops white, staying several feet inside the property lines to be safe, since I’m not a surveyor. Land sells more easily when people can see what they’re getting and envision what can be done with it.”

Just Start somewhere

If investing in Florida real estate is an unfulfilled dream, buying land can be an important first step. There are still parts of our state where an acre of land is considerably less than a down payment on a median priced home. With the median home in Florida priced at over $216,000, many first-time investors can have a hard time finding an affordable property. Owning property means paying taxes, but it’s a foot in the door. Even if it takes a year or two, it’s a great first step. Plus, you may be able to leverage the land when it comes time build. Or you may just flip the undeveloped property.

The third way…

Undecided about whether to buy land or a developed property? Many investors purchase an unsuitable house on an ideal parcel. Tearing down an existing property comes with its own set of challenges, but it allows you to enjoy advantages of both options. This will be explored in:

“Tear-downs: Perks and Pitfalls”

Whether you are thinking about investing in land or a developed property, PropertyOnion.com offers a comprehensive way to search of off-market properties, whether they are in foreclosure, tax deed sale, HUD, or wholesaler.