Pros and Cons of Buying Land in Illinois

As the leading soybean producer and second highest corn output state nationwide with average per-acre pricing ranging $7,500 on lower quality soils up to over $12,000 for prime Central Illinois cultivation areas, Illinois anchors its economy in agriculture. Nearly three-quarters of total land gets dedicated to farming purposes spanning over 26 million acres. Yet beyond harvested croplands, the state still holds nearly 5 million acres of unutilized vacant rural land parcels according to USDA data, often sold off piecemeal by aging owners and heirs lacking farming passions. 

For builders, farming entrepreneurs and other visionary buyers willing to take risks purchasing then repurposing such dormant lands productively, ample Illinois acreage discounts exist. But the route proves challenging lacking experience. We’ll outline key pros and cons for prospective investors evaluating Illinois land acquisition opportunities next.

Pros of Buying Land in Illinois

Good Investment Potential

Land in Illinois can be a solid investment opportunity. The state has a stable real estate market, and land values have steadily increased over the past decade. Both residential and commercial land hold their value well. With proper due diligence, buying land in Illinois can lead to good returns.

Variety of Land Uses

You have numerous options when purchasing land in Illinois. Agricultural land is plentiful, especially in rural areas. Farmland produces corn, soybeans, wheat and more. Illinois also has forests, wetlands and prairie land. Residential land near cities allows building single-family homes. Commercial land works for retail, industrial and office spaces. There's great flexibility.

Business-Friendly Environment

Illinois offers a pro-business climate making commercial land attractive. The state provides incentives like tax credits, grants and low-interest loans. Illinois also has business-accelerator programs, including the Advantage Illinois program for startups. The business environment facilitates development.

Access to Major Markets

A prime reason to buy land in Illinois is access to major Midwest markets. Chicago is the economic hub of the region with 9.5 million residents in its metro area. Excellent transport links allow shipping products easily. Airports and railways connect to other major cities. The location is ideal for business.

Potential Tax Benefits

Owning land in Illinois provides possible tax deductions. Costs like mortgage interest, property taxes, maintenance and improvements may be tax-deductible. Depreciation deductions apply to commercial buildings. Conservation easements can also yield tax reductions. Consult a tax advisor about potential benefits.

Cons of Buying Land in Illinois

High Property Taxes

While Illinois offers some tax benefits, property tax rates are among the highest in the U.S. The median effective rate is 2.1% compared to 1.1% nationally. Taxes keep rising too, so it's an ongoing expense. Chicago's property taxes are steep. Factor this into your budget if buying land.

Complex Regulations

Navigating real estate regulations in Illinois can be tricky. There are municipal zoning rules, state environmental laws, construction codes and more. Work with professionals like lawyers to ensure full compliance. Unexpected issues could arise. Regulations protect landowners but add complexity.

Potential Environmental Issues

Illinois has a history of industrial manufacturing, coal mining, steel production, chemical plants and agriculture. Past activities have led to soil and water contamination in some areas. Do thorough environmental assessments before purchasing land. Cleanup costs could be significant if problems exist.

Vulnerability to Natural Disasters

While no state is immune to natural disasters, Illinois sees substantial risk. Flooding is common, especially along major rivers. Tornadoes frequently touch down during spring and summer. Blizzards and ice storms occur in winter. Make sure your insurance coverage is adequate. Disasters could damage land and property.

State Financial Issues

Illinois has faced severe budget problems in recent years. While conditions are improving, the state still has significant deficits and unfunded pension liabilities. High taxes strain residents and businesses. Financial uncertainty could negatively impact the real estate market. Monitor the fiscal situation carefully.

Key Factors When Buying Land in Illinois

If you decide to purchase land in Illinois, keep these tips in mind:

• Hire professionals to assist with property searches, due diligence, contracts, closings and more. Don't go it alone.
• Research properties thoroughly including titles, boundaries, easements, zoning and natural features. Verify no liens exist.
• Have environmental and geotechnical studies conducted to uncover any problems early.
• Negotiate purchase terms favorable to you as the buyer including contingencies.
• Seek land parcels with characteristics like good locations, utility access and growth potential.
• For commercial uses, ensure proper infrastructure is in place to support development.
• Create budgets with realistic projections and have funds for unexpected costs.

Working with a Company Like Land Boss

Some land buyers partner with companies like Land Boss that purchase property directly from landowners. This can make the process quicker and easier compared to traditional sales.

Land Boss has been in business for 5 years and has closed over 100 land transactions across the U.S. They have an efficient acquisition process and the funding to buy land with cash offers. There are no contingencies or commissions.

The benefits of selling to Land Boss include:

• Closing deals in your timeframe, often within days or weeks. You get your money fast.
• Avoiding the complexities of listing property, marketing it and negotiating with multiple buyers.
• Skipping costly fees like those charged by real estate agents. Land Boss purchases land directly.
• Preventing uncertainties that come with traditional contingent offers that can fall through.

Landowners should still consult professionals like lawyers when working with companies like Land Boss to represent their interests in transactions. But it simplifies the process.

The purchase price offered will be below full retail market value since the company needs to make a profit reselling the property. But Land Boss states they make fair cash offers based on current market conditions. For many sellers, it's an advantageous way to divest challenging-to-sell land.

Should You Invest in Illinois Land?

Illinois provides many promising opportunities for land investors. However, there are also risks and challenges that need evaluation. By weighing the pros and cons, you can make an informed decision about investing in Illinois land.

Factors in Favor of Investing

Strong market fundamentals - Illinois has a steady real estate market with rising property values and consistent demand from buyers and tenants. This creates a favorable environment for returns on investment.

Strategic location - Situated in the Midwest, Illinois offers easy access to major metro areas, airports, rail lines and interstate highways. The location fuels economic growth.

Business incentives - Programs like tax credits and development grants make Illinois attractive for commercial real estate investment. Incentives can maximize ROIs.

Range of options - Investors can choose from rural farmland, residential acreage near cities, commercial parcels and more. This diversification reduces risk.

Causes for Concern

High property taxes - Illinois has some of the steepest property tax rates in the U.S. This cuts into investor profits significantly.

State budget issues - Ongoing budget deficits and pension liabilities in Illinois create economic uncertainty. This volatility can impact land values.

Zoning and regulations - The complex legal landscape in Illinois may pose challenges when developing or improving property.

Illinois provides promising real estate investment opportunities but also potential pitfalls. Conducting thorough due diligence is key to minimize risks. Illinois can be a profitable market by selecting strategic properties and understanding the local real estate landscape. With careful evaluation and preparation, the state offers strong potential.

Final Thoughts

As with any major investment, purchasing land in Illinois has both advantages and disadvantages to weigh. But with ample due diligence and preparation, real estate can be a strategic long-term asset. The state offers a stable market with diverse land opportunities.

Work carefully to find parcels meeting your needs and consult professionals to avoid missteps. If selling land, be open to non-traditional exit strategies like direct sales companies. With the right approach, Illinois can be fertile ground for lucrative land investments and transactions.

Frequently Asked Questions (FAQs)

What types of land are available for purchase in Illinois?

Illinois has a diverse landscape that includes farmland, forests, prairies, wetlands, and vacant residential/commercial lots. Popular options are farmland used for corn, soybean, wheat production, as well as rural and suburban land for single family homes. Commercial land near cities works for retail, industrial, or office spaces.

What is the average cost per acre for land in Illinois?

Land prices vary greatly based on location and use. But statewide, average prices per acre recently ranged from $4,000-8,000 for cropland, $2,000-$4,000 for permanent pasture, and $500-$2,000 for timberland. Near major metro areas, vacant residential/commercial land can cost $100,000 per acre or more.

Are there tax benefits to owning land in Illinois?

Yes, landowners can deduct expenses like mortgage interest, property taxes, maintenance costs, and improvements. Commercial properties may qualify for tax deductions on depreciation. Conservation easements can also provide tax reductions. However, Illinois has high property tax rates, which impacts overall costs.

What professionals can assist with buying land in Illinois?

It's advisable to work with real estate attorneys to review titles/deeds and draft purchase contracts. Property inspectors help assess condition and identify issues. Appraisers determine fair market values. Surveyors define boundaries and easements. Environmental experts check for contamination. Title companies facilitate closing.

What steps should I take before buying land in Illinois?

Conduct thorough due diligence on parcels that interest you. Research titles, boundaries, zoning, utilities access and natural features. Have environmental and geo-technical studies done to uncover any problems early. Also evaluate the surrounding area, local real estate market, and factors that impact land value and development costs.

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