If you’re thinking about investing in real estate, investing in single-family homes or commercial properties in particular may instantly come to mind. However, sometimes, the treasure that can buttress your bottom line may not be the building you’re looking at buying—it may be the earth sitting directly underneath it.
The reality is that land is an often overlooked yet potentially lucrative asset if you know what to buy, where to buy it, how to maintain it, and how to market it. In fact, it’s not a bad idea to have a mixture of land ownership and properties in your real estate investing portfolio.
Here’s a glimpse at a few land investment options and how to market them for a profit.
These are small properties that often exist on undeveloped pieces of land that are a couple of hours or less from suburban areas. If you’re looking at an infill when buying land for investment purposes, be sure to take into consideration how easy building on the property is. Also, is the location of the infill a desirable one?
The great thing about infills is that they offer builders a simple and fast way of generating a profit if they can build affordably and sell their properties quickly. So, if you have an infill, you have an asset that builders may be eager to buy from you. An infill can be particularly attractive if it has some or all utilities already available. However, even if an infill lacks utilities, don’t skip over it. A number of alternative water sources and systems that produce power are now easily accessible to the public and will appeal to consumers seeking green energy.
City property is another excellent land investment option, as it can be transformed into a shopping space, storage facility, factory, or warehouse. It could even be used to hold a doctor’s office, restaurant, or mechanic shop.
When you are evaluating commercial land’s potential, think about what type of development would work best on that piece of land and if there are any zoning restrictions. For instance, if you think the land could be used for building a shopping center, is there convenient road access? Do potential shoppers live nearby? Asking these kinds of questions now may help you make a larger profit in the future.
A subdivision land tract can be relatively large and carry a great deal of promise for building a housing subdivision. So, how exactly do you know if you have a piece of land on your hands that’s worth investing in?
For starters, check with your county zoning and planning authorities. They can help you to determine if you can extend services to the land in an affordable manner. This is an important step because some sizeable subdivision developments across the United States have been stalled since county services could not be affordably extended to them. Also, take a look at the by-laws to determine if you can subdivide the property.
Remember that not every piece of land actually needs developing. You could purchase land that could be used for your or another party’s personal enjoyment. In fact, this happens to be a very common and legitimate reason for investing in land.
If you’re interested in investing in land to be used for recreational purposes, consider whether you will be permitted to fish, hunt, or erect a cabin on the land, and if other people could do this safely as well. If so, you may have an attractive asset that you could sell for a profit to someone who loves doing outdoor recreational activities or even wants to live off the grid.
In years past, investors were discouraged from investing in agricultural properties due to their large upfront costs, combined with the investors’ lack of knowledge about these types of properties. However, research shows that farmland is one of the best investments out there, with the market being worth more than $2.5 trillion in the United States alone.
So, why is farmland so hot right now when it comes to land investment? Because it’s a relatively stable investment that doesn’t carry much volatility, especially if you invest in an area known for its high production, you can experience substantial profits. On top of this, it has a negative correlation to other classes of assets, which means that the prices of land usually increase when bond and stock prices decrease. For this reason, it’s a wise asset to add to a diversified portfolio of investments.
One of the biggest reasons for the popularity of land investment is that you can’t produce land in a factory. In other words, the supply of land is fixed, so the sole economic factor that fluctuates is demand.
What does this mean for you? It means that you as a farmland investor could find yourself in an extremely beneficial economic position. That’s because you’ll be controlling the small amount of a commodity that is in high demand—the dream of every investor. Of course, purchasing farmland does require a large amount of capital upfront, but this type of land investment will pay dividends down the road. Over the past 20 years or so, farmland has risen in value by a few percent each year.
For land in residential areas, consider speaking with neighbors directly, as they may be interested in expanding their properties into the spaces you own. You can also contact nearby builders to see if they’d be interested in your residential or commercial land tracts. Also, feel free to showcase your residential, commercial, farming, or recreational property on eBay, Facebook, Craigslist, and Zillow.
In addition, be open to marketing your land for a variety of possible uses. Whether these involve farming, developing an energy farm, or hunting, you don’t know what may ultimately attract buyers. Just be sure to find out what your property is zoned for to avoid misleading buyers with improper information.
Now’s a great time to get your feet wet with buying and marketing land for a profit. You can learn how to raise money to invest if you set up a planning session with me, Joe Fairless. If we’re a good fit, we can sit down and discuss your strategy for your future land investments.
Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.