Table of Contents
What Are the Real Risks? {#what-are-the-real-risks}
Here's the truth about land ownership:
It's NOT risk-free.
In fact, it comes with risks most investors never see coming.
Property taxes that drain your wallet.
Liability lawsuits from trespassers.
Environmental contamination you didn't cause (but have to pay for).
Markets that crash overnight.
Money that's completely trapped.
Sound scary?
It doesn't have to be.
Because every risk can be managed—if you know what you're dealing with.
Let me break down the 9 biggest risks of owning land in 2026.
And show you exactly how to protect yourself.
Financial Risks: Property Taxes That Never Stop {#financial-risks-property-taxes-that-never-stop}
Here's the deal:
Land doesn't generate income.
But it DOES generate bills.
Property taxes are the #1 ongoing cost of land ownership.
And they never stop.
| Risk Factor | Impact | What It Costs |
|---|---|---|
| Annual Property Taxes | High | $500-$5,000+/year depending on location |
| Tax Assessment Increases | Medium | 3-7% annually in growing areas |
| Special Assessments | Medium | $1,000-$10,000+ for road/utility improvements |
| Insurance Costs | Low-Medium | $200-$1,000+/year for liability |
Why does this matter?
Because land sits there doing nothing.
No rent. No income. No cash flow.
Just bills.
Pro Tip: Before buying, calculate 5 years of holding costs. Property taxes + insurance + maintenance. If you can't afford to hold for 5 years with zero income, the land is too expensive.
The Hidden Tax Trap
Many buyers forget:
Property taxes aren't fixed.
They INCREASE over time.
In fast-growing areas?
Taxes can jump 10-15% per year.
That $500/year tax bill becomes $1,000 in just 5 years.
Liability Risks: Getting Sued for Your Land {#liability-risks-getting-sued-for-your-land}
This one surprises most landowners:
You can get sued for injuries on your property.
Even if:
- You didn't invite them
- They were trespassing
- You've never even visited the land
It's called "premises liability."
And it's real.
Common Liability Scenarios
| Scenario | Risk Level | Potential Cost |
|---|---|---|
| Trespasser Injury | Medium | $10,000-$100,000+ |
| Attractive Nuisance (pond, old building) | High | $50,000-$500,000+ |
| Recreational User Injury | Medium-High | $25,000-$250,000+ |
| ATV/Vehicle Accident | High | $100,000-$1M+ |
The best part?
You can protect yourself easily.
Vacant land liability insurance costs $200-$500/year.
That's cheap peace of mind.
Safety Warning: Old wells, abandoned structures, and bodies of water are "attractive nuisances." They attract trespassers AND lawsuits. Fill old wells, fence ponds, and demolish unsafe structures immediately.
Environmental Hazards: What Lurks Beneath {#environmental-hazards-what-lurks-beneath}
Here's a nightmare scenario:
You buy beautiful land.
Two years later, the EPA shows up.
There's contamination from a gas station that closed in 1972.
Guess who pays for cleanup?
You do.
Current owners are responsible—even for contamination they didn't cause.
Environmental Risks to Watch For
| Hazard | Detection Method | Cleanup Cost |
|---|---|---|
| Underground Storage Tanks | Phase I Environmental | $10,000-$100,000+ |
| Industrial Contamination | Soil Testing | $50,000-$500,000+ |
| Pesticide Residue | Soil Testing | $5,000-$50,000 |
| Wetland Violations | Survey/Delineation | $10,000-$75,000+ in fines |
| Asbestos (old structures) | Inspection | $2,000-$30,000 |
This isn't theoretical.
CERCLA (Superfund) liability is strict, joint, and several.
Meaning:
- You're liable even without fault
- You could be responsible for 100% of costs
- Even if others contaminated the site
Pro Tip: ALWAYS get a Phase I Environmental Site Assessment before buying. Cost: $1,500-$4,000. It identifies red flags BEFORE you own them. Skip this and you could inherit a six-figure cleanup bill.
Market Risks: When Land Values Crash {#market-risks-when-land-values-crash}
Land isn't immune to market crashes.
In fact, vacant land often crashes HARDER than homes.
Why?
Because it's speculative.
No one NEEDS vacant land.
When the economy tanks, land buyers disappear.
Historical Land Value Drops
| Market Event | Impact on Land Values | Recovery Time |
|---|---|---|
| 2008 Financial Crisis | -40% to -70% in many markets | 8-12 years |
| 1990s S&L Crisis | -30% to -50% | 5-8 years |
| Local Industry Closure | -50% to -80% | Often never |
| Zoning Changes | -20% to -60% | Varies |
The 2008 crash was brutal:
Land in Florida, Arizona, and Nevada dropped 50-70%.
Some parcels STILL haven't recovered.
What Causes Land Values to Drop?
- Economic recession
- Rising interest rates
- Population decline
- Major employer leaving
- Negative zoning changes
- Environmental discoveries
- Infrastructure cancellation
The bottom line?
Don't buy land you can't afford to hold for 10+ years.
Markets cycle. If you're forced to sell in a down market, you lose.
Liquidity Risks: Your Money Is Trapped {#liquidity-risks-your-money-is-trapped}
Here's what nobody tells you:
Land is one of the least liquid assets you can own.
Stocks? Sell in seconds.
House? Sell in 30-90 days.
Land?
6-18 months is NORMAL.
Sometimes years.
Why Land Is Hard to Sell
| Factor | Impact |
|---|---|
| Smaller Buyer Pool | Fewer people buy land vs. houses |
| Financing Difficulty | Banks require 20-50% down on land |
| No Immediate Use | Buyers must envision development |
| Inspection Complexity | More due diligence required |
| Location Sensitivity | Remote = fewer buyers |
What does this mean for you?
Money you put into land is TRAPPED.
You can't access it quickly.
Emergency? Need cash fast?
Your land won't help you.
Pro Tip: Never put more than 10-20% of your net worth in illiquid assets like land. Keep cash reserves for emergencies. Land should be LONG-TERM money you don't need.
The "Discount to Sell Fast" Problem
Need to sell land quickly?
Expect to take a 20-40% discount.
That's right.
Fast land sales almost always mean price cuts.
Zoning & Regulatory Risks {#zoning--regulatory-risks}
Zoning can destroy your investment overnight.
Here's how:
You buy land zoned "residential."
The county rezones it "agricultural."
Your $100,000 lot is now worth $30,000.
Legal? Yes.
Fair? No.
Happens? More than you'd think.
Regulatory Risks to Watch
| Risk | Likelihood | Impact |
|---|---|---|
| Downzoning | Medium | -30% to -70% value loss |
| Building Moratoriums | Low-Medium | Delays, holding costs |
| New Environmental Rules | Medium | Restricted use, lower value |
| Utility Capacity Limits | Medium | Can't build/develop |
| Road Access Changes | Low | Landlocked, major value loss |
| Eminent Domain | Low | Forced sale at "fair" price |
Eminent Domain: Forced Sale
The government can take your land.
It's called eminent domain.
For roads. Pipelines. Public projects.
They pay "fair market value."
But here's the catch:
Their definition of "fair" and yours probably differ.
Safety Warning: Before buying, research ALL planned infrastructure projects within 5 miles. Contact the county planning department. Ask about future road expansions, utility corridors, and zoning changes. What you don't know CAN hurt you.
Legal Risks: Title Disputes & Easements {#legal-risks-title-disputes--easements}
Title problems are EXPENSIVE.
And they hide until you try to sell.
Common legal risks:
- Title defects – Old liens, unclear ownership
- Easements – Others have rights to use your land
- Boundary disputes – Neighbor claims you're on their property
- Adverse possession – Someone claims ownership through use
- Unpaid taxes – Tax liens from previous owners
Title Problems Comparison
| Issue | Discovery Phase | Resolution Cost | Timeline |
|---|---|---|---|
| Old Mortgage Lien | Title Search | $1,000-$10,000 | 2-6 months |
| Boundary Dispute | Survey | $5,000-$50,000+ | 6-24 months |
| Easement Conflict | Title/Survey | $2,000-$25,000 | 3-12 months |
| Adverse Possession | Discovery/Lawsuit | $10,000-$100,000+ | 1-3 years |
| Heir Claims | Often at Sale | $5,000-$100,000+ | 1-5 years |
The Easement Nightmare
You buy land.
Plan your dream home location.
Then discover:
A utility company has an easement right through the middle.
They can run power lines wherever they want.
Your building site? Worthless.
Pro Tip: ALWAYS get a full title search AND a current survey. Don't rely on old surveys. Boundaries shift. Easements get added. A $500 survey can save $50,000 in legal fees.
How to Mitigate Every Risk {#how-to-mitigate-every-risk}
Good news:
Every risk I mentioned can be managed.
Here's your protection checklist:
Financial Risk Mitigation
- ✅ Calculate 5-year holding costs before buying
- ✅ Keep 6-12 months of expenses in reserve
- ✅ Don't overleverge—aim for 50%+ equity
- ✅ Budget for annual tax increases (5-7%)
Liability Risk Mitigation
- ✅ Get vacant land liability insurance ($200-$500/year)
- ✅ Hold land in an LLC for asset protection
- ✅ Post "No Trespassing" signs
- ✅ Eliminate attractive nuisances (old wells, ponds, structures)
Environmental Risk Mitigation
- ✅ Get Phase I Environmental Assessment
- ✅ Research previous property uses
- ✅ Check EPA Superfund site maps
- ✅ Test soil if agricultural history exists
Market Risk Mitigation
- ✅ Buy below market value (leaves room for downturns)
- ✅ Focus on areas with population growth
- ✅ Diversify across multiple properties/regions
- ✅ Have a 10+ year holding horizon
Liquidity Risk Mitigation
- ✅ Keep land under 20% of net worth
- ✅ Maintain emergency cash reserves
- ✅ Buy land with multiple potential uses
- ✅ Choose properties with road access
Legal Risk Mitigation
- ✅ Get title insurance (owner's policy)
- ✅ Commission a new boundary survey
- ✅ Review all easements with an attorney
- ✅ Verify legal road access
Frequently Asked Questions {#frequently-asked-questions}
Is owning vacant land risky?
Yes, but the risks are manageable.
The biggest risks are:
- Property taxes without income (ongoing cash drain)
- Liability exposure (trespasser injuries)
- Illiquidity (hard to sell quickly)
- Market volatility (values can drop 30-50%+)
With proper due diligence and insurance, most risks can be mitigated.
What happens if someone gets hurt on my land?
You could be liable for their injuries.
Even if they were trespassing.
This is especially true for "attractive nuisances" like ponds, old buildings, or wells.
Solution: Get vacant land liability insurance ($200-$500/year) and eliminate hazards.
Can I lose money on land?
Absolutely.
Land values dropped 40-70% in many markets during the 2008 crash.
Local factors like employer closures, population decline, or zoning changes can also tank values.
Protection: Buy below market value, hold for 10+ years, and diversify.
What are the ongoing costs of owning land?
| Cost | Typical Range |
|---|---|
| Property Taxes | $500-$5,000+/year |
| Liability Insurance | $200-$500/year |
| Maintenance | $100-$1,000/year |
| HOA/Assessment Fees | $0-$500+/year |
Budget 2-4% of land value annually for total holding costs.
Should I buy land through an LLC?
Yes, if you're an investor.
An LLC provides:
- Asset protection (personal assets shielded from lawsuits)
- Tax flexibility
- Privacy (your name isn't on public records)
Setup cost: $100-$500 depending on state.
How do I check for environmental problems?
Order a Phase I Environmental Site Assessment.
Cost: $1,500-$4,000.
It reviews:
- Historical property uses
- Aerial photographs
- Environmental databases
- Site inspection
This catches contamination before you own it.
What's the biggest mistake land buyers make?
Skipping due diligence.
Most problems are discoverable BEFORE purchase:
- Title issues → Title search
- Boundary problems → Survey
- Environmental contamination → Phase I assessment
- Zoning restrictions → County planning office
Spending $3,000-$5,000 on due diligence can prevent $50,000+ in losses.
The Bottom Line
Owning land has real risks.
But they're manageable.
The key?
Do your homework BEFORE you buy.
- Get title insurance
- Commission a survey
- Order environmental assessments
- Calculate holding costs
- Carry liability insurance
Smart investors don't avoid risk.
They understand it.
And they protect themselves accordingly.
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