Highest and Best Use of Land

Highest and Best Use of Land The thing about shopping for rural land is that the process triggers dreams. You can look at an undeveloped parcel and see a private vacation retreat or a high-end secluded fishing lodge or a self-storage warehouse. Before you pursue those dreams, a property must be valued in regards to its “highest and best use” and that condition has already been chiseled before you ever saw the property. The highest and best use of land is an analysis tool that evaluates the utility of land to a prospective buyer, stripping away all but the economic essentials. Splendid views, land conservation, recreation – all are shuffled to the sideline. All that remains, is how valuable a property is when it's subjected to its theoretical highest and best use. This is tested in several ways: Legally Permissible Local governments and urban planners may have beaten you to your dream property and enacted zoning restrictions. These could deal with environmental concerns about development or commercial considerations. Unless you want fighting with local zoning boards to be in your future, buying land already classified will tell you what the highest and best use will be. Even land that is currently not zoned, and can be massaged into any form, may be subject to zoning down the road so it is important to study current use patterns in the area as guidelines. “Grandfathering” is often allowed if you establish a use prior to zoning restrictions, but this is not a given. Deed restrictions from previous owners can also influence potential use. Physically Possible These days it seems, as if with enough money and ingenuity, anything can be built anywhere (see World Cup 2022, Qatar). On the other hand, if you do not have access to an unlimited credit line improvements to a site may not be feasible. Obviously, if your plans are grander than the size of the property to support them, a parcel will not pass the test of physical possibility. Financially Feasible If potential uses for the intended property satisfy the first two tests, the land is subjected to a financial feasibility test. Although improved property is generally more valuable than vacant land, the assumed highest and best use of the land may mean clearing away existing structures. The cost of demolition may not be recovered in the value of the future vacant land and redevelopment would not bring the property to its highest net value. Maximally Productive Here the targeted use for the intended land is evaluated against other potential uses and banged against market forces, to discover which use is maximally productive. So you could have your heart set on building that fishing lodge, but the property may be zoned for more profitable commercial warehouses. You can go ahead with the lodge, however the analysis of the highest and best use of land will tell you that your new property is not as valuable as it could be. As you click (or swipe) through properties for sale here on LandHub.com, it's important to keep two things in mind: Certainly, intangibles like view and recreational possibilities are important, but if your goal is to focus specifically on the highest and best use of land, the analysis techniques offered above can play an important role in determining which parcel will help make your dreams come true.