Vacant land might not seem like it offers buyers much. But it’s actually one of the most overlooked investments in the whole of real estate. The reason it’s so overlooked has to do with three common misconceptions. The first is that it doesn’t produce an income. The second is that it doesn’t do anything. And the third is that it’s just plain old boring.
The problem is that none of these are legitimate reasons not to buy land. Land can, in fact, generate some pretty significant cash flow if you know how to use it and it’s also convenient, given that it doesn’t usually require a lot of maintenance. In fact, this is probably the biggest strength of land. It just sits there, and you don’t have to lift a finger.
Not convinced? Here are some reasons why you should invest in land.
Land Gives You Peace Of Mind
Land has a few very desirable properties which no other asset has. First of all, land never wears out. Unlike a building or a factory, the land you bought a hundred years ago is as good today as it ever was. The second reason people love land is that it can’t be stolen and it’s hard to damage. Sure, your land could get flooded, but by and large, land is difficult to destroy, and it certainly can’t be stolen. Third, land tends to be pretty cheap compared to other assets. Taking all of these benefits together, it’s clear that land gives its owners peace of mind that simply isn’t attainable if you hold other assets.
Land Is Cheap To Own
Owning property is expensive. You have to pay local tax rates, mortgage rates and a bunch of other taxes and fixed costs. But owning land is the precise opposite. The amount of insurance you pay on a plot of land is small, and you’ll rarely have to pay any tax. Even if you do, it’s usually very cheap. This makes land a great place for you to put your cash: the government can’t get its hands on it, and the upkeep is low.
Landowners Call The Shots
One of the main problems with buying property is that you have to go through a bunch of middlemen, usually by law. Banks and mortgage companies all want a cut of any transaction, leaving you worse off. But with land, there’s no reason to ever borrow money from a bank. You can start with a small sum of $3000 and simply buy and sell land as prices fluctuate, building your wealth in the process. Looking for great deals on pieces of land requires practically no startup money and carrying out transactions is very cheap.
There’s Far Less Competition
Most real estate investors are obsessed with investing in the property they can see: houses, apartments, and commercial property. But because there are so many of them, they all end up bidding the prices up until it becomes impossible to turn a profit. Land, on the other hand, is largely free from competition. There’s no need to constantly outbid a competitor because you’re usually the only person buying. Again, this makes investing in land superior to other forms of property investment.
Land Is Finite
The land we have is the land we’ve got. Nobody is going to come along and make more of it (unless Elon Musk suddenly makes it super cheap to go to Mars). And since there is only a limited quantity of land for sale, it’s an extremely valuable resource, one that big investors are desperate to get their hands on. Buying land can also be very lucrative if you happen to buy it somewhere that’s experiencing high population growth. If growth takes off, you’ll find yourself surrounded by people desperately bidding higher and higher to get their hands on your land.
Landowners Are Often Usually Highly Motivated To Sell
Another thing that works in favor of land investors is that landowners are usually very highly motivated to sell. The reason for this is that most people don’t actually live near to the land that they own. They’ve got no emotional connection to it and just want to get money for it, even if that means making just a few pennies on the dollar. Keep a keen eye out for people who want to rid themselves of their land. Usually, there’s a bargain to be had, especially if the owners think that the land is useless and can’t generate income for them. Apathetic buyers are a property investor’s best friend.
Texas Acres has released this infographic, “The benefits of Buying & Holding Property”:
Featured image courtesy of Wikipedia.