Should I invest in undeveloped beach property? The lots have dropped in price considerably. — Mike Mannion, Salisbury, Md.
Test the waters first. A beach lot may have a lower cost of entry than an investment in a beach home, says Gary Eldred, author of Investing in Real Estate, but your risk is much greater.
At issue: conditions that limit what you or anyone else can do with the land, such as access to utilities and zoning that restricts the size and location of any structures.
You’ll need a good agent and appraiser to determine whether that price drop signifies a deal or simply reflects news that has lowered the land’s value.
A neighbor might have an easement on the property, for example, that restricts the area you could build upon, says Sheila Dodson, executive director of the Coastal Association of Realtors.