If you’re looking to purchase a type of real estate which is guaranteed to come at a massive discount compared to its surrounding neighborhood, then a landlocked property might be just what you’re looking for.
But what is a landlocked property, and why are most investors reluctant to buy it? Is the fear of buying a landlocked property justified? And how do landlocked properties fare as investment opportunities?
1- What is a Landlocked Property?
A landlocked property is simply a property or a piece of land that cannot be accessed through a public road and can only be accessed by going through someone else’s land. While this might seem ridiculous at first – I mean, why would it even be a thing, right? – but this type of property is actually more common than you think.
Landlocked properties exist for many reasons.
Some of these reasons might be random and very unique to their specific case; however, in most cases, the reason goes down to the land being divided by its owners or previous owners, or it was parceled in a way that resulted in a piece of land getting landlocked. Regardless, landlocked properties have one very positive aspect that makes them appealing to some niche real estate investors and buyers – landlock property value!
To put it simply, landlocked properties are cheap! Much cheaper than most other types of real estate properties. For example, a landlocked property might exist in an expensive neighborhood surrounded by beautiful homes, but its price would be much lower than any other piece of property around it due to its nature.
However, and due to their nature, landlocked properties are very repelling for most real estate buyers. But, if you do decide to buy a landlocked property, then I’m happy to tell you that IT IS possible to gain access to your property…
2- Gaining Legal Access to a Landlocked Property
Did you think that it’s impossible to gain access to your own landlocked property? Some people do…that’s why they don’t consider buying it.
However, it is indeed possible to gain access to landlocked properties, and you can even get permission to build a road leading to your property through someone else’s land.
This, however, is where things get complicated and where you, as a potential buyer, need to be cautious about the decisions that you make.
While the possibility of gaining access to your landlocked property is there, it doesn’t mean it’s within your grasp. Each case involving a landlocked property is unique and should be approached differently.
It all comes down to your neighbors and their willingness to grant you’re an access easement agreement.
3- What is an Easement Agreement?
An easement is an agreement that you, as the buyer of landlocked property, would sign with the owner of your neighboring property which you’re trying to gain access through. It is important to note here that an easement agreement is transferred with the ownership of the property, even if the easement wasn’t acted upon (a road or a path to the landlocked property was never built).
This means that it is also possible to find landlocked properties with existing easements on them, making it much easier to establish access to the property. If there isn’t a pre-existing easement, however, then you will have to get your neighbor to sign one with you. While this might sound simple in theory, it’s is quite common for the owners of neighboring properties to show unwillingness to grant you access.
Since you’d be taking a piece of their land to build a road on, or using their backyard to get to your home, the number of reasons why they might not like the idea is infinite.
4- Types of Access Agreements
There are multiple types of agreements that grant you access to your landlocked property. An easement is the most common type and it is the broad term that is used to describe most access agreements. Easements are common because they are flexible, and both parties can agree on the terms of the agreement. Most notably, easement agreements are common because they allow you to use your neighbor’s land to build a road on it.
However, if you want to gain access to your landlocked property through your neighbor’s land or existing pathway, but you don’t want to build a road on it; then, you might want to consider a right-of-way agreement instead. Right-of-way agreements are easier to get since the only effect they have on your neighbor is that you might pass through their land to reach your property.
5- The steps to buying a Landlocked Property
Now that you know what a landlocked property is and that you need a landlord property easement in order to access your property, let’s go over the steps that you should be taking before purchasing the property and in order to reach an easement agreement with your neighbor:
First Step – Common Sense
The first and foremost thing you will want to do before buying a landlocked property is – use your common sense.
If a property is surrounded by four giant buildings from all sides, for example, it is extremely highly unlikely that you will get an agreement that allows you to tear down a building so that you can reach your property.
So – and this is especially relevant if you’re looking to buy a landlocked property in your local state or area – make sure to go and visit the property’s location. Take a good look at it from all directions and assess its feasibility using your common sense before making any sort of commitment.
Second Step – Call an Agent
Whether you are able to physically visit the location or not, it is always a great idea to contact a local real estate agent who knows the area well. If you can’t go see the place, ask the agent to send you pictures of the place to help you establish your opinion about it.
Additionally, a real estate agent will have access to the property’s previous ownership records and see if there is a pre-existing landlocked property easement agreement on it.
Third Step – Shake Hands
If you like the property and you think it has potential, then it’s time for you to make your first move and test the waters. Contact the neighboring property’s owner or make an appointment, and express your desire to purchase the landlocked property while explaining how it will affect him. Make sure to go with a plan and a price. Almost in all cases, you will need to pay the neighbor in order to use their land – and that price should be a part of the easement agreement.
While it’s not very common, sometimes the neighbor will be very agreeable and will not negotiate the deal. A great neighbor would simply sympathize with your situation and grant you the access that you need. In most cases, however, they will negotiate the deal.
Fourth Step – Negotiate a Deal
In short, be prepared to negotiate. Have a plan B in mind, and make sure to stick to a price sealing. In this case, it helps to have your investment plan figured out based on the prices you’re willing to negotiate. For example, if you’re looking to resell the property or use it as a passive-income property, then you will want to see how each price you negotiate will affect your investment in the long run.
Another thing that you will be negotiating is the maintenance of the new road or the pre-existing road that you want to use if it originally belonged to the neighbor. This maintenance cost, as well as the road’s location and how it might affect the general maintenance cost of the property, should also be part of your investment calculations before negotiating the price.
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Fifth Step – Call a Lawyer
This is the dividing step at which you seriously need to consider the amount of commitment that you want to put in.
If your negotiations with the neighbor didn’t go smoothly and you could not reach an agreement, but you’re still determined on buying the property and you think this landlocked property’s value is worth the effort, then it’s time for you to call a lawyer.
At this step, you’re not looking to make things too serious. You’re not hiring a lawyer so that you would go to court. You’re only asking for legal advice and help in negotiating the agreement.
A lawyer will know the state’s laws and will have records of all of the property’s data which they can use to support your case.
They can then help you draft a more professional deal or easement agreement and negotiate with the neighbor on your behalf.
While the legal fee can be considered in this case, if you truly believe that this landlocked property value is worth it, then by all means – go for it!
Sixth Step – File a Lawsuit
If, however, the neighbor is still uncooperative, then it’s time to get serious with a lawsuit.
This is the point that you don’t want to reach, and you should only pursue a lawsuit if you’re desperate for the landlocked property in question.
Lawsuits cost A LOT of money, and if you’re not getting the money’s worth of value then it’s probably a bad investment.
You should also keep in mind that, while the word “neighbor” might seem friendly, your neighbor could be a giant corporation that owns the office building blocking you out. In that case, would you really want to go to court against them?
Seventh Step (Optional) – Don’t Buy
Remember, there are plenty of landlocked properties out there for you to choose from.
If at any point you feel like the property that you’re trying to gain access to isn’t worth the trouble, don’t be afraid to walk out.
If you’re a beginner investor, for example, I don’t recommend going past the fourth step. If you can’t find a property with an agreeable neighbor who will understand your situation without having to resort to a lawyer, then it’s perfect for you!
If you’re an aggressive investor with large amounts of money to spare, and you think a property will make you a lot of money but you failed to negotiate an easement agreement, then go ahead and resort to the court, as long as the projected return on investment is worth the money you’re spending on legal services.
6- Want to Buy a Landlocked Property? Start Here!
Now that you know what a landlocked property is, the hassle of buying one, and the steps necessary to buy one – if you’re sticking around, then you must be ready to take the next step!
Whether you want to buy a landlocked property as an investment or as a primary residence, you will need the right tools to help you make smart decisions when buying the property. Luckily, Mashvisor is here to help!
If you’re ready to start searching for landlocked properties for sale in your area or anywhere else in the U.S, then our Property Finder is the tool for you.
Using our Property Finder tool, you will be able to search for specific property types based on your preference, such as off-market properties or foreclosures. Additionally, you can use a wide selection of filters related to location, price range, projected returns, or even the preferred rental strategy – all based on your own criteria.
Combine that with our other tools, like the customizable Investment Property Calculator which analyzes each property for its investment value, or the Property Marketplace where you can get in touch with off-market sellers and real estate agents who can help you close the deal.
Conclusion
Landlocked properties are not for beginner investors who don’t know their way around the market.
Deciding to buy a landlocked property can be a risky investment, especially if you rush into it without significant planning and taking slow steps before making any financial commitments.
In either case, if you like the idea of investing in landlocked properties and you’re looking for the place to start – start by subscribing to Mashvisor and gain access to a wide selection of tools that are all designed to help you make smarter investment decisions.
To get access to our real estate investment tools, click here to sign up for a 7-day free trial of Mashvisor today, followed by 15% off for life.