Why Invest in Land.
Why Land is my most favorite Real Estate Investment!
Raticanta Mandrencar.
Everyone knows about the famous quote “Buy land, they’re not making it anymore.” — Mark Twain.
So true!.
They aren’t making ANY MORE of it and the demand for the land has always been ever growing.
Non-stop!
The demand is always increasing and the price of land today has the potential to become more valuable in coming years. We have witnessed that the price of land has been consistently appreciating and is expected to go up in future as well. The appreciation in the prices of land is double that of properties because of the demand and supply gap. The land would yield better returns than other properties.
The purchase of land has always been one of the most secure forms of real estate investment, and if you are looking for a long-term asset, land is perfect. Buying and holding onto undeveloped land has the potential to earn viable returns for investors, especially in the long-term.
Buying land estates and income generating property are popular investment options as of now. As the housing market goes up and down regularly, land is always going to hold its value. After all, there is only limited land in the world, and no one is making more. If you choose to invest, you’ll almost always get a great return on that investment.
The advantage in land investing is, there is very little competition in the world of raw land investing. Majority of real estate investors have their minds set on the assets such as houses, apartments, and commercial property. Because that’s what everyone else does. Most investors don’t understand the superior benefits that come with land, and this can definitely play to your advantage.
Land Investing Is a Huge Opportunity
I’ll be completely honest with you. Realty investment in general and land investing in particular, without question, is the most powerful strategy I’ve used to build my real estate investing portfolio. I bought the land plots and I held them for quite a long period of time. Occasionally, sold one or two vacant land plots and generated income by selling them.
Most people fail to think that the land is in limited supply and if they acquire and hold it, then it has huge potential to generate income in different ways. The available land is a precious resource with limited quantities. Especially when you purchase land with the future potential growth, you will find yourself with a finite asset that a lot of other people want to get their hands on. The land owned can be turned into small developed plots and sold to individuals for building houses. It can be turned into resort type of dwellings for the urban folks, who would like to take a break on weekends.
If vacant land already has some desirable features, you can use it to generate revenue while waiting for the property’s value to increase. You could earn money from land with fertile soil and a water source by renting or leasing your land to farmers. You can also make money from transitional land by:
Your portfolio may contain Stocks, bonds, mutual and bullion. They all make sense in certain scenarios, and so does land. If you go into this with the intent of holding the right property for the long-term, it can make a lot more sense (and be a lot more profitable) than any other retirement vehicle out there. Land is a long-term, tangible asset that doesn’t wear out and doesn’t depreciate. Nothing can get broken, stolen, or destroyed, except in the time of national calamities.
How do I start looking for the Land?
“Don’t wait to buy land. Buy land and wait.” — Will Rogers.
Before you purchase any parcel of land, do some research into the zoning of the area. It’s most important. Start with finding out if the land for sale is zoned for residential, commercial or both. Finding something that is zoned for both is a great find because it gives you the widest array of options when selling. Also try to find out if there are any liens or easements on the property, this information will be critical when selling. Now consider the area that the land is in, is it an area that is likely to be developed? How does it match up in terms of location and proximity to amenities such as schools, hospitals. Existing or proposed.
Don’t rely on your Real Estate Agent. Never ever fully trust and depend upon the agent broker. Verify yourself, what has been presented to you by the broker. This is vitally important, especially if you are not local to the area in which you intend to purchase the land. Even if you are several miles away from your present location, go and visit it in person. Make sure the property that you are buying is what you need and want.
With the help of technology and google maps, you can now look at the GIS maps and explore more details. In Spite of having decades of experience in Real Estate dealings, I too ended up investing in the land deal just trusting a Real Estate Broker. That deal till this date has not yet seen the fruitful day. I am not sure if at all I will get my money back or I will ever own that land. The brokers furnish the brochures and video clips of the land. But unless you go and visit the site, you never know if the land for sale is next to the landfill or is it at the hillside or it is located in the deeply wooded infested with different creatures.
If possible, walk it with a copy of the plan. Insist the owner of the property to walk with you. Check the boundaries and neighbouring areas. Ensure the land is not earmarked for a government project or fall in a politically or socially challenged sector. Some areas are earmarked for the specific developments or Industrial purposes only.
The owners will usually have a deeper knowledge of the boundary lines and landmarks, not to mention the history of a property and any neighborly disputes. Verify yourself the boundaries and check with the survey plans. Try to find out how the surrounding land has appreciated in the past years. If the area you are looking at has seen some developments there, it is a good chance that land will appreciate for a premium price as the development continues.
When scouting for the land to buy, look out for the place that has been vacant for a long period of time.
Why? Because the majority of vacant landowners by default are always absentee owners. Non residents. When a person doesn’t live inside or even near their property they’re trying to sell it. Or if it is inherited then, there’s less of an “emotional connection” because they have never spent a penny on it. Also, it isn’t their primary residence. In many cases, you’ll find that these sellers are willing to sell their land below market value or for a very reasonable price — simply because they are unable to manage it. There are not enough resources to generate any income out of it or they don’t live anywhere near it. As a result, they are much more apathetic about it. Find these people, and you will find some incredible deals. It is a common factor that vacant land owners are highly motivated to sell.
Who should buy land as an Investment!
“The wise young man or wage earner of today invests his money in real estate.” -Andrew Carnegie
Buying a plot of land is recommended investment options for young investors. The land is considered better than brick mortar built up property for people between the age of 30 to 45. Because, the investment in the land is lower than acquiring brick and mortar assets. There is no headache of extra monthly costs. Maintenance cost of land is very low compared to other properties. The building would age with time resulting in higher maintenance costs. The return value of the property might decrease as its new look would disappear.
When you buy vacant land the right way, it’s better to buy each property with your own cash and avoid dealing with banks and mortgage companies altogether. You can try to get the seller financing or on structured quarterly payments. Investment in vacant land is not advisable through mortgages, unless you want to develop it as early as possible. Personally, I would not advise anyone to buy the land by taking a loan from the bank, if it is a long term investment.
When I first bought a plot of land in 1982 it was partially out of my savings and arrangement of structured quarterly payment. None of my Real Estate Investments were through borrowings. They were either through the structured deals, a sort of seller financing with a certain amount on signing the agreement and rest with two or four equal instalments spread over 12 months. This also helps you to keep a check on your monthly disposable income with a strict budget and forces you to manage your cash flows.
Although it is ideal to buy the land with your own cash, without any borrowings, you must keep in mind that there is also a potential risk. It is illiquid asset. You must have a continuous cash flow to sustain your lifestyle. As substantial amount is tied up in an asset that is illiquid. A person holding cash can invest in these type of lands. As large initial capital is required to buy a property and this may turn into a bad investment if you would not generate good returns.
Why You Should Invest in Vacant Land
“The wise young man or wage earner of today invests his money in real estate.” -Andrew Carnegie
Investors looking for relatively secure opportunities should consider devoting some of their money to invest in vacant land. Vacant land investing can give you several ways to profit. Some people purchase land, wait for the value to increase, and sell the property at a higher price at a later date. Others who invest in vacant land generate revenue and seek enjoyment from the property while they wait for the property’s value to increase.
There are also many different ways to invest in land. However, some care must be taken while investing in land. Do a basic check on the ownership and title. An investor must do a good and detailed research about the land and the owner before buying the land.
No matter how you decide to invest in vacant land, you should consider the details before you spend money on any property. Developing a plan with the help of a qualified land professional will make it easier for you to generate higher profits.
For generations, People have been moving from one area to another due to economical conditions. We have seen that families migrate from rural areas to the suburban or urban areas due to job or occupational needs. Once they are set and their status improves, they reverse the trend. Well todo or affluent people have been moving from urban to suburban areas. As families accumulate more wealth or move into retirement, they often want to get away from crowded urban areas so they can enjoy the privacy of suburban and, even better, rural homes. As more people move to the cities, the boundaries of suburbs will continue to reach out further causing a demand for vacant land to build homes on in the future near the outskirts of large metropolitan areas. Even with the recent pandemic there has been an increase in the demand for rural residential land and farm houses.
The present pandemic of COVID-19 virus has taught us all the lesson, how important it is to stay away from the crowd. Many will tend to move away from the urban areas and there is a slow trend seen in some metro cities, to move into urban areas
Those who are living in the metro cities of New York, Chicago, Mumbai, Delhi, Lisbon during the pandemic, for example, have seen the challenges of surviving in crowded metropolitan cities. As resources become increasingly scarce and increasing numbers of contagious people make moving out in public unsafe, more and more people are opting to get out of urban centers. They are seeking either to move to suburban or rural areas, with less crowded communities, spacious and green surroundings.
This trend of the sudden interest in rural land should increase property values. If you already own vacant land, you can profit from the growing interest in vacation farms and recreational land.
Ofcourse, not everyone will want to live in rural areas exclusively. Those who can afford to purchase rural villas or even farm houses are more likely to do so now that they’ve seen the difficulty of living in cities during a pandemic.
What’s Right! Residential Land or Commercial Land.
“The best investment on earth is earth.” — Louis Glickman.
So true!
Often people who intend to invest in real estate face the dilemma of investing in land or buying an existing property. In my opinion, different investments are appropriate for different people. The majority of the investors focus on Multifamily or Commercial Real Estate Investments. The USA is the only country that has Multifamilty real estate concept. I have not come across anywhere in the world, this type of realty in existance. With the focus on investing in and flipping homes, they have completely sidelined an investment in vacant lands that has become lost in the glamour of high profile home flipping.
At the same time, it’s often challenging to determine which pieces of vacant land make suitable investments. Ideally, the purpose of investment is to get a positive return on your investment as quickly as possible. And with land you usually make more when you play the long-game. At the same time, you don’t want to sell too early and miss the opportunity to boost your profit.
There are different types of land that actually fall under this real estate investing strategy. However, by comparing the three main ones we can provide some insight into what is better, investment in land or property or farm house. I will talk about these main three types only. Residential Land, Commercial Land and Small farms.
Residential land and Commercial lands are zoned by the Town and Country Planning bodies, for a specific use that are yet to be developed. These are one of the most common types of land investments one must seek for a few reasons. The most obvious is: these land plots are already reserved for a certain type of development. This not only gives investors a starting point when analyzing the deal, but it can also help with the financing process in case he is looking to get the finance through Banks. Obviously, the Lenders want to know what the return will be on a piece of raw land, and with predetermined and reserved commercial and residential areas the purpose of the investment in the land is already more clear.
These types of areas do require a fair amount of planning. Not only do investors need to select the right area to purchase land in, but they also need to assess the market before deciding what to develop. For example, is it ideal for all residential or mixed usage? Will a retail space or mixed-usage building get a higher return on investment in that area? Is the area ideal for multi storeyed complex or individual villas? Even the most seasoned investors will need to do research before investing into these areas.
Small Farm House.
You can make money from vacant land while you wait for the value to increase, but that depends on whether people find the property attractive. You can construct a small farm house and create recreational activities for yourself or for renting it out as a vacation spot. Or grow some organic farm products which are in high demand. This land must meet the basic needs of water and electricity. Without fertile soil, water, electricity, trails, and other features, you might not earn enough money to cover property taxes and additional costs. But you can enjoy the land while you own it.
The real estate market is resilient and is a great place to invest your money. But in general, demand and sales are up and so are prices.
Undeveloped, vacant land becomes an undeniable investment opportunity when you’re willing to spend time and money adding buildings, infrastructure, and other features. For example, you can increase the value of vacant land by installing the utilities that most people look for when buying homes. A piece of land that no one wants becomes much more desirable once you add electrical lines, water, and sewage.
Pay careful attention to a property’s features before you buy it. Without trees, water, and other desirable features, you probably can’t make much money from it while you wait for the value to increase.
Buy and Hold — Mantra.
“Landlords grow rich in their sleep without working…” -John Stuart Mill
The mantra, “buy and hold” is a strategy where an investor buys an investment property and holds on to it for a long period of time. The idea is to wait for the property to appreciate in value before selling it for a return on investment. In the meantime, the investor can rent it out, for various uses to generate some income which could cover mortgage payments.
With Vacant Land, You Don’t Need to “Do” Anything to the Property. In most cases, you really only need to know one thing: “Is the property suitable for what I want to use it for?” What can I do with it? Can I develop it myself or find a developer to add value to it.
The vacant land is very inexpensive to maintain. When you own a piece of land for the right price, there are no mortgage payments to make, no utility bills to pay, the cost of property insurance is nominal (if at all you have got one), and property taxes are very low. If you want to park your excess cash somewhere and forget about it, vacant land could be the best investment option you must look for.
The vacant land gives you peace of mind. Not dealing with tenants and their problems about toilets, bugs, mold, lawn care, leaking roofs, burst pipes, broken furnaces, and the hundreds of other issues that come with owning multifamily or commercial buildings. Your vacant land doesn’t involve those things. Once you buy it. It’s there.
To make your land more attractive to buyers, try adding value to it. Keep it clean and tidy as much as possible. Try clearing it regularly. Removing all blockages and stumps around is an attractive aspect to developers as it will save them time and money in the long run. Prospecting on the value of land can really pay off in the end if done correctly. development companies will pay a premium price for land in the right place.
Many occasions, or in some areas, foreseeing the future development prospects, the land grabbers try to manipulate and underplay the price tactics spreading some unsavoury rumours. To avoid falling prey to such elements, make sure that you buy land in a place where you have a good reach of someone on your behalf who can oversee the land or where you can visit the land frequently.
Keep the vouch on the market price in the area of the land location. It is easier to sell the land when the prices are high because of the high demand for land. At the same time selling a property at the best price is not so easy because of the different demands of customers. It’s the timing and development within the location.
To conclude, even though investment in land is a good source of income, don’t make it your primary investment because it is illiquid or cannot easily be sold. Buying land is not a good option if you want cash income or return on at a short notice. So do your homework before investing in land and good luck!