I’ll go first since I just got burned on this one pretty badly…
I bought what I thought was a great 40-acre parcel in rural Texas last year. Decent price, seemed like a solid hold. Did all the usual checks: title search, survey, zoning, etc. What I didn’t do was dig deep enough into the access situation.
The property had legal access via an easement road, which showed up fine on all the paperwork. What I found out AFTER closing was that this “road” was basically just a ranch trail that hadn’t been maintained in years, and the adjoining landowner had let it completely grow over. Getting any kind of vehicle back there now would require thousands in brush clearing and road work.
Even worse - turns out there’s been an ongoing dispute between previous owners and the easement holder about maintenance responsibilities. Now I’m stuck in the middle of it, and any potential buyer is going to see this as a major red flag.
Cost me about 15k less than I expected when I finally sold it, plus all the headaches and legal research trying to figure out my options.
Now I literally drive every single access route myself, talk to neighbors about any history of disputes, and even check Google Street View historical images to see how the roads have looked over time. Lesson learned the expensive way.
What about you all? What’s the mistake that taught you a costly lesson? Are there any other hidden traps I should be watching out for ?
Make sure legal access and physical access are on the same path. I bought a property in Arizona where the legal access was along a path that was too steep to ever put a road, but there was already an existing driveway along a different route. This deal turned out to be profitable because a neighboring land owner bought it, but the legal access along the existing driveway was questionable and could have been a problem.
I bought a double lot that I was going to split and sell. Plats were created in the 1920’s. I thought access was on a gravel road that showed on the plat. It wasn’t. Access was through an unopened road from the 1920’s. The municipality gave me the right to open it (check on this. many won’t) But it would have cost me $15-20K to open it and then I would have to fight the adjacent owner who was encroaching on my unopened road. I sold it to a land flipper at a very low price and he then sold each lot to an adjacent owner at a price where he could make money. i just wanted it to be gone.
I almost bought a piece of property without checking for oil and gas activity. There was no visible oil and gas wells or structures. Since I had been in an oil and gas service business, I decided to check at the last minute. It turned out there was a plugged oil well. This changed how I wanted to use the property because you never want to build a structure over a plugged well.
Oof, @seanjean - that access road situation sounds like a nightmare. I feel your pain on the neighbor disputes especially.
Mine was water rights, and it almost killed a deal on what should have been a slam dunk flip in Colorado. Found this beautiful 20-acre parcel with a creek running right through it, which seemed like a huge selling point. Did the title work, environmental, all the standard stuff.
What I missed was that the water rights had been severed from the land back in the 1950s and sold to a local irrigation district. The previous owner had just been using the water without anyone noticing or caring, but when I went to get permits for a small residential development, that’s when everything came to light.
Turns out I owned land with a creek I couldn’t legally touch. Couldn’t even drill a well without jumping through massive hoops with the state water board. What looked like prime development land was basically just expensive pasture.
Had to spend another 8k trying to negotiate water rights back from the irrigation district (who weren’t interested) before finally accepting a much lower offer from a rancher who just wanted it for grazing.
Now I always order a water rights report as part of my standard due diligence, even if there’s no visible water on the property. In the West especially, you can’t assume land ownership includes water rights. Expensive lesson but at least it was early in my investing career.
Your Google Street View historical images tip is genius, by the way - definitely stealing that one!
One of my scares was from a heating oil below ground tank.
I found a great ~1.0 acre site near a small town , and bought it for a great price. I didn’t see any major concerns during due diligence and even walked the whole site myself. The lot had previously had a house on it that was condemned, and the small town eventually demolished the house along with several others in the area as part of a project to revitalized and re-develop the area. Because of this, it was highly desired and had a good re-sale value so looked like an all-around great buy.
About a month after closing, I had a buyer under contract and had listed “no representation” on the underground storage tank. I was working with a local realtor to sell and he asked me several times about a couple small 1" galvanized pipes coming out of the ground the buyer had asked about. I had just assumed they were from the house demolition. Turns out they were to an abandoned heating oil tank from the house that was built in the early 1900’s. The house was demolished, but they left the tank in the ground. I had no clue how to handle this, and reached out to several contractors that specifically remove oil tanks. In North Carolina, they are an environmental hazard and as soon as you remove them from the ground, do any investigations, or modify the thank the owner becomes responsible for any possible spills/leaks to remediate the ground… and that cost ranged anywhere from $10k to $20k if there was a leak… I purchased the property for less than $5k with an estimated resale value of $25k. I even asked the contractor the likelihood of a leak, and he said it was 50/50 in the area.
The buyer that I had under contract for $25k was a savvy investor/builder and he actually backed out of the deal. Because it was a very desirable area, we re-listed on the market and I was fully expecting to barely break even on the property. Luckily, we found another buyer for $30k ($5k above asking) that we ultimately went under contract with and sold the property to with the storage tank “as-is”. The buyer was willing to take the risk because they wanted to build on the lot and lived in the area.
I got out of this situation making a great profit because the property was really desirable, but my lesson learned was to always “dig deeper” into any below ground structures/tanks that may have been left from a previously demolished house.