For ease of ownership, vacant lots beat other real estate investments

Why shouldn't you own a vacant lot? There is nothing to repair, paint, or burn down, no water leaks, no graffiti; in fact, there is no easier property to own.

Thus, why not let inflation work for you, too?

Before you buy a vacant lot, however, remember that buying property is different from buying a Big Mac. Here are some considerations that go into selecting a vacant lot to buy:

* Select an area

Choose a geographic area large enough to offer dozens of possible candidates but small enough for you to get to know something about the area. Your selected area should be centered on your home, your work, or an area you are already familiar with.

If you plan to retire to a given area, maybe that's the place for you to start.

Once your target area is selected, you'll want to collect some general demographic data. Learn what you can about business trends, population shifts, census data, recent construction, building permit activity - in short, collect and maintain general statistics about your target area.

You'll discover new sources of information, amass information for future negotiations, and protect yourself from buying a lot where no builder activity is likely.

* Check with your county assessor

The county assessor keeps records on current property values for taxation purposes. He also keeps the names and addresses of property owners and records all recent sales. He maintains maps, owner indexes, and tax records. He is obviously the custodian of a great deal of useful information.

Learn how to find and use this data, because you'll need it.

County assessor records are public records, and everyone is entitled to use them. In fact, they form the basis of searches by title-insurance companies and lawyers. Most individuals never bother to learn about these records, either because of ignorance of their existence or unwillingness to invest the time.

You can verify the original amounts of mortgages, the existence of trust deeds, and the delinquency of taxes, usually at little or no cost except the time to look these items up.

* Choose a way to go

There are several ways for the well-prepared investor-to-be to proceed once the homework is done. You can place an ad for real estate wanted, inspect the target area in person, review tax records, or rely on a real-estate broker.

Placing an ad is the quickest, most direct way of getting started. Anyone who answers your ad is a possible seller. However, a few well-chosen words in the ad may tend to limit callers to those you are really eager to talk to. If you are looking for a full-size lot with curb and gutter already installed, say so in the ad. If only certain ZIP codes are of interest to you, say so in the ad.

If you want only agricultural parcels more than 20 acres in size - get the idea?

If you omit important qualifying information, then every property owner in the county may assume you want to buy his land.

By inspecting the target area personally, you can drive every street and alley, noting the location and approximate size of parcels that interest you. When your inventory is complete, go to the county assessor's office and look up the name and address of the property owner for each parcel.

You now are prepared to send each owner a personal, handwritten letter, expressing your interest in buying his parcel.

(If you use a form letter, most owners will figure out your plan, which will weaken your ultimate negotiating position.) You can then follow up any responses to your mailing.

If you decide to review tax records, there are certain advantages and disadvantages. On the plus side, you will be able to postpone detailed inspection of the target area. If you are not already familiar with the target area, this may not be a good idea. You will have immediately a list of owners of vacant property, since whether or not property is improved is a matter with tax consequences.

You will not be able to easily tell the slope or condition of each lot. You may determine that the lot has delinquent taxes, which might indicate a more willing seller, but since the penalties for late property-tax payments is less, generally, than the prevailing interest rates, this indication is not as reliable as it once was.

You could, however, proceed to write letters to each property owner of vacant property (there could be hundreds even in a relatively small target area) and follow up the responses.

If you choose to rely on real-estate brokers, you will probably wind up paying for their services, one way or the other, and that's the way it should be.

Few brokers will list a property substantially below retail price levels. And even though the seller usually pays the commission (as high as 10 percent), the commission will be mentally included in the selling price by the seller. I much prefer doing the groundwork myself and trying to pay wholesale rather than retail prices.

* Learn how to negotiate

The time to learn about the techniques of negotiating is now - before you need to use them.

Visit your local library or bookstore and study the available texts and references on negotiating. It is dangerous to assume that you are already an expert negotiator. You are very probably wrong, but your opponents will not be likely to smarten you up.

My best results have come from negotiating with people who didn't know they wanted to sell their property until they received my letter.

Most sellers who have already decided to sell before they hear from you have already done some homework of their own. This could turn out to be to your benefit, since the best deals are made between motivated, knowledgeable parties, but it may work to your disadvantage if the seller has already been conditioned to expect an unrealistically high price.

* Get the best terms

Remember, you are not buying a cheeseburger. Try to get the best terms you can.

Your first offer should be one with a low down payment and a high purchase money mortgage, carried by the seller. (This assumes that your financial resources are finite and would be enhanced by a little creative financing.)

I have seen property bought and sold for nothing down or with a deferred down payment. Property has been sold on the promise of future income. Don't make the mistake of being in a hurry to pay all cash for your first vacant lot.

* Get it in writing

When you and the seller have finally agreed to terms, put the agreement in writing.

Most states require real-estate matters to be in writing before the agreements have any legal effect. It's also good business practice, since future disagreements are usually minimized. I recommend using full escrow services and obtaining a policy of title insurance. Both are usually worth the modest price.

Custom varies across the country as to who usually pays escrow and title fees , but in most states it is still a negotiable item between the buyer and the seller.

If you have selected and investigated a target area, located a desirable property, negotiated a good price and purchase terms, and concluded the transaction using escrow services and title insurance, you're in business.

Now get ready for a visit by the tax collector.