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If you’re planning to invest in land, it’s important to understand land use terminology. Land use is a designation that determines what you can build or develop on a specific piece of land. Another definition of the term from Land.com is “the total of arrangements, activities and inputs that people undertake in a certain land cover type.” So what does this mean for potential owners? Knowing the difference between different categories of land use will help you make the best decisions when investing in undeveloped land.

Here are the 5 major categories of land use:

Residential

As you might guess, the purpose of residential land is to build residential homes. This can include any type of residential property, from single-family homes to condo complexes. Residential land use typically comes with some restrictions for the size and placement of the buildings. For example, there may be a height limit or rules that each building has to be a certain distance apart.

Commercial

Commercial land is reserved for commerce. Office buildings, warehouses, retail stores and restaurants are all common examples of commercial land use. If you buy a parcel of land designated for commercial land use, anything you build on it must be for business rather than residence.

Agricultural

Examples of agricultural land include farms and ranches. Most land designated for agricultural use will also allow certain types of residential structures like a single-family farmhouse. However, agricultural land is set aside for growing and cultivating crops and keeping livestock.

Recreational

Recreational land is where you can build parks, swimming pools, athletic fields and fairgrounds. This category can include a wide range of different developments as long as they are built with the intent of non-commercial activity. Recreational land might be owned by government bodies, like with city parks or private individuals who choose to make the space available for the community to enjoy.

Transportation

Land designated for transport use is another category often owned and managed by cities, counties or other large entities. Transport land is where you can build anything facilitating movement from one place to another like freeways, railroads, airports and bus stations. Sometimes private landowners or homeowners’ associations might own transport land for their own private roads, but it’s more commonly maintained by local municipality.

Land Use vs. Zoning

One important thing to be aware of is that land use is not the same thing as zoning. Land use determines what you can use the land for, but zoning determines how the local government regulates what land can go where. City planners work with zoning rules in order to make the most efficient use of particular pieces of land. Zoning laws are why you often see residential areas clustered together rather than spread out in between businesses or farmland.

When you purchase undeveloped land, you’ll need to consider both zoning and land use in combination. Luckily, it’s fairly easy to search for properties by land use category. You’ll also find “mixed use” as an option which can have varying requirements depending on the specific property. Understanding these terms will help you make the best decision in finding and planning for your land investment.

Tag: Land Investment