Investing in land is something quite a few people have considered at least once in their lives. Maybe it was a late-night infomercial that sparked interest or a simple conversation among friends. Buying or selling a property in any area will always bring additional questions. There are several types of real estate investments with the most elusive to understand being vacant land.
Consequently, it is important to understand exactly what investing in raw land actually means and some of the benefits. While it might seem like an oxymoron to state it, vacant land is precisely that. Vacant. There has not been any work performed on the land to make it habitable or ready for any type of business. Residential and commercial land has been zoned for specific use.
1. Easy Acquisition
In many instances, raw land can be purchased for a low down payment or even cash. It is not the best idea to look into a regular mortgage when purchasing raw land. Those typically rely on a residential or commercial building as collateral for the loan. Empty land is full of hypotheticals, and banks do not appreciate having to hypothesize.
Since not everyone has the money on hand to make a land purchase out of pocket, the next best thing would be to acquire a land loan. Depending on what you plan to do with the land, will depend on the type of land loan that is needed. While it might be easier to secure the land with cash, a land loan can be worth the effort it takes to receive one.
Owning a property that someone else wants, will make the price of it rise; especially if the availability of property is on the decline. Naturally, vacant land will gain in value accordingly. However, there could be other ways to make a profit off the land, before the developers move in.
“Buy land. They ain’t making any more of the stuff.” Will Rogers
Since the value of the property will vary according to the area, what the property is used for will certainly increase its worth. Providing the property is in an area that is in high demand, the potential for selling a property at top dollar increases.
3. Variation on Income
Unlike land that has already been built on, raw land has much more potential. One of the main strategies regarding real estate would be “flipping” properties. However, there are several others that could be more beneficial and should be carefully considered by potential investors.
Some of the many uses of raw land:
- Residential or commercial developments
- Utilization of mineral, air, and water rights
- Made into a community park
- Divided into smaller parcels to be sold
4. Home Sweet Home
Perhaps after it is all said and done, the object of investing in land is to build your dream home. The land is all yours and can be built on to your heart’s content. The realm of possibility opens up when you realize your nearest neighbor is 5 miles down the road and you no longer have to smell someone else’s Saturday night special. The options are options and the limit is only the imagination. Inside the zone limitations of course.
Looking at an empty plot of land is very similar to looking at a handful of unmolded clay. It may not appear to be much on its own, but with a little effort, it can be molded into a masterpiece.