When considering investment options, land has a certain allure. There are many potential benefits to buying just land: it can serve as a hedge against inflation, can appreciate in value over time, and is relatively low maintenance compared to other investments. However, when it comes to investing, numerous factors should be taken into account before making any purchase. So you might e wondering is it worth buying just land?
Is Buying Land a Good Investment? Top Factors to Consider
Raw land investing can be great, but in order to be successful at it you should take into consideration multiple factors. When deciding whether buying just land is worth the investment, you should consider these questions:
- Is the location of the land desirable?
- Is there potential for development, or are local authorities looking to buy it in the future?
- Is access to utilities and roads readily available?
In addition to the issues of location and potential, you should also research what will be required to maintain the land:
- Is it arable, or is it barren?
- Will you need fertilizers or other inputs to keep the land in good shape?
- Is there an abundance of wild animals that could be hunted on the property?
Finally, it’s important to consider property taxes:
- Are there any local taxes or fees associated with owning the land?
- Is the land subject to capital gains or other income taxes?
- Is there a higher rate of taxation for agricultural lands or restrictions on development?
Benefits of Land Ownership
For most real estate investors, purchasing land is an attractive option. Here are the top benefits to have in mind:
Land Appreciates
The primary benefit of buying vacant land is that land tends to appreciate in value over time, despite many market fluctuations. Therefore, if you buy land with the intention of selling it later on at a profit, there could be significant potential for financial gain.
Land Can Help You Build an Equity
You can use your land as collateral to build equity if your land is a potential building site. By investing in improvements to the land, such as installing a septic system or landscaping, you can raise the property’s value and increase its saleability.
Vacant Land Is Low Maintenance
When compared to other investments, such as stocks and bonds, buying raw land requires relatively low maintenance. There are no accounts to manage or stocks to monitor, so it is an ideal investment for those who want a hands-off approach.
It’s a Tangible Asset
Land is a tangible asset, meaning it’s something that can be owned, seen, and touched. Unlike stocks or bonds, you can physically access your land and see the results of any improvements or changes to the property.
Land Is a Finite Asset
Land is a finite asset, meaning there’s only so much of it around. This means that if you purchase land in an area with desirable features, such as access to utilities or close proximity to an urban center, chances are high that the value of the land will rise over time.
Tax Advantages and Government Assistance
Depending on where you live, certain tax advantages may be available if you buy just land. Furthermore, often there are government programs that help promote the development of land for agricultural or residential use.
It Offers Financial Security
Buying just land also offers financial security, as it can serve as a hedge against inflation. Inflation is the general increase in prices that occurs over time and reduces the purchasing power of money. By owning land, you are essentially buying an asset that will hold its value or increase in worth due to rising property values.
Can You Make Money Just Buying Land?
Here are a few ways to benefit from your land investment if you have decided to invest in land but do not yet have a firm plan in place.
Buy and Hold
This long-term approach is probably more successful than other real estate investments. You can purchase land now and hang onto it until the surrounding areas develop. That way, your raw land investment can make you better profits when you decide to sell down the road.
Lease to a Farmer
Leasing out your land is an efficient strategy to increase your profits. If you can find some acreage for a good price, don’t think twice about buying it.
Farmland has historically produced higher returns than mutual funds, bonds, equities, and other sorts of investments. Statistics also show a 4.6% increase in the capital value of farmlands. So, by leasing the land, you may be able to earn a high return that would even help you pay for your taxes and insurance.
Lease to a Company
To execute their operations, many companies hunt for property. They provide you with a long-term lease on the land and pay you a monthly or yearly rental fee. Pet sitting, animal breeding, and enterprises requiring sizable storage facilities are just a few examples of the business types that can be looking for land.
In addition to this, you can lease your land for additional uses. These include the placement of phone towers, ranchers, and billboards. Leasing is a fairly effective and simple technique to generate a consistent income from your undeveloped land.
Buy Low, Sell High
As cities expand, land becomes one of the best real estate investment opportunities.
You can make a sizable profit if you can buy a vacant piece of land while the market is at a low point and sell it later when the price is high. You can also transform your land into something more to raise its worth and usefulness. You can establish various entities on the same plot of land to enhance your income sources.
What Type of Land is a Good Investment in 2023?
The type of land that is a good investment in 2023 depends on the purpose of the investment.
Farmland
If you are looking for long-term appreciation, then investing in agricultural or residential land will likely yield better results than other types of land investments, such as commercial, industrial or undeveloped land. Investing in farmland can be especially lucrative thanks to the rising demand for food and agricultural products and government subsidies that can help with land maintenance.
Farmland investment can be also a great way to build equity and take advantage of tax benefits. With the agricultural market increasing, buying farmland is becoming an increasingly attractive option, with average returns of 10.74% per year. Plus, owning land can provide a hedge against inflation while allowing you to earn passive income.
Subdivision Development
Subdivision development is one of the top land investment tips to consider. It entails buying a sizable parcel of land and splitting it to allow for the construction of several homes. It’s a practical way to increase the value of your land. More land parcels equal greater financial gain. You can sell smaller portions of land to other customers and keep some of it for your own use when you divide larger amounts of land.
Additionally, it would be far simpler to find buyers when selling land that’s smaller in acreage than a huge developed property. However, when purchasing raw land to subdivide it, ensure that the region can access public utilities at reasonable costs.
Commercial Property Development
Converting vacant land into a factory, warehouse, storage space, mechanic shop, or shopping complex is another fantastic example of profitable real estate investing.
If planning for commercial use of the land, research the possibilities in light of the type of development you choose. You must consider several factors, including local zoning laws, road access, utility access, location, and the availability of essentials on or close to the property, before going through with the land-buying process.
Recreational Property
There are several advantages to using the land purchased for personal and financial enjoyment. Recreational land is often the first choice of land investors looking for cheap land for sale.
When investing in recreational property, you may maximize the use of your land, earn money, and keep the land so that its value will increase. Recreational land can be used in a variety of ways. It can be developed into a vacation destination for the weekend, your new favorite fishing area, a communal garden, a trip for the whole family outdoors, or even a venue for camping, hiking, riding ATVs, and much more.
Is It Worth Buying Just Land?
Land purchase is an investment that can be used in many ways to increase its value and create new income streams. Whether you are looking for long-term appreciation or short-term cash flow, investing in land is a great way to generate wealth.
Different types of land investments offer different advantages, so it’s important to do your due diligence, research the potential opportunities and understand what you’re getting into before investing. With the right approach, you can make a smart decision that will ultimately help you achieve your long-term financial goals.
At Discount Lots, we help you buy land at a fraction of its market value. Our team is knowledgeable and experienced in the land investing industry and can provide essential support to ensure that you make a wise investment decision. We offer parcels of land for sale across the United States and our inventory is always growing. Contact us today and check the latest land deals!
