I have always wondered about this. I live in a neighborhood of aging 1920s bungalows, tending more towards rental properties as time goes by, and every so often one of them succumbs to neglect and is demolished, leaving a vacant lot. And I’ve always wondered why more people-next-door-to-the-new-vacant-lot don’t snap those up and add them to their holdings. Well, of course, your average slum landlord isn’t going to be interested in making a nice big garden in the lot next door, but there are a certain number of people who do own their own homes around here, and if it was me, I’d buy the lot and fill it up with everything my peapickin’ little gardening heart had ever desired. Fruit trees. I could have a peach tree.
So maybe owning the vacant lot next to your house doesn’t do anything magical for your house’s appraised value, and the lot turns out to be just a tax-assessment millstone around your neck, and you’re better off letting the city have it for back taxes?
One problem is that getting a mortgage on a vacant lot can be difficult, and the terms tend to be less favorable. If you are paying cash, then that factor falls out of play.
Buying the lot and preventing it from going to seed, so to speak, coud prevent the value of surrounding lots from dropping, and I suppose the right improvement might add value to your adjoining property. It’s pretty tough to predict, mainly because nobody else does it. An appraiser will have trouble finding comparable sales for homes with owned adjoining lots. So it’s less likely that the acquisition would raise property values.
We did it. An extra acre. Didn’t want any one to build on it.
In Colorado, you can ‘combine’ the properties so they fall under one tax ID number. This way you don’t have to pay the (much) higher tax that we charge for vacant land.
You can do this with out replatting, and dropping the property line. This allows you to sell it off again.
It’s not uncommon around here, But then my Wife is an appraiser for the County, and I’m GIS for the county, so when ever this happens, we both see it.
It would depend a lot on the neighborhood, the desires of the municipality and most importantly, the cost of buying the lot.
If you can by the lot fairly cheaply and the city isn’t pressing to redevelop it or trying to tax the crap out of you for owning it, it might not be a bad idea. But an expensive lot wouldn’t add much - you’d lose money by combining it with an existing house and lot. Likewise if the city was hot to have another house built on it or wouldn’t let you combine properties, then it could be a headache.
Man, it suddenly occurs to me that the easy option for wanting more land is to burn down my neighbors’ houses. As long as they don’t decide to rebuild, I ought to be able to snap up the land cheap in this market.
If you own two side-by-side lots, it might elevate the total value depending on several factors. If you were to put both on the market, they would make a more attractive package (someone might want to buy the two for the same reason you bought the extra lot – privacy), and in some zoning districts, a larger lot has more development options.
Example – I once had two side-by-side lots in Los Angeles, both zoned for multi-unit development. If a developer built the max number of units on each lot separately, he would have been allowed 8 + 8, or 16 total. But if he combined them, he could build a single apartment house with 8 + 8 + 1 (a bonus) units, or 17 total. Just a quirk in the zoning that could be used to increase the perceived value.
Yeah, I always thought it might not be a bad thing to own the lot next to you, but I thought maybe there might be some specific reason why more people didn’t do it. Just lack of initiative, I suppose.
My parents owned the empty lot behind our house when I was a kid. The property was sold to them that way, and that’s how they sold it when we moved. The house next door was like that, too. Dad said that originally (long before he bought the place) all four lots were owned by the same people, with just our house sitting on the corner. (I’m not sure why they had so much land–they may have owned it before it was actually part of the town.) Two lots were split off later to build the house next door.
I went by there last year, and those lots are still empty (except for sheds, gardens, etc.) today. I really don’t think people who were as lax with outdoor maintenance as these people should have been interested in a property with an extra lot, but that’s just me. I used to mow that lawn, now it’s your turn!