Discussions of real property investment normally focus on single-family homes, multiple-family dwellings and commercial properties. Land rarely enters into the conversation, even though can often bring higher returns. Anyone can buy land, but there is far less competition than trying to land a stock or other investment that other people are vying over. And since real estate investors tend to sway towards apartments and homes that they can rent, you’ll be stuck in fewer bidding wars and will be able to negotiate on price.
Investing In Land
Why choose land over classic real estate investments? There are many practical reasons.
Land is usually low-maintenance. You rarely have a tenant, which means you won’t be receiving midnight calls on a Saturday night because of a broken toilet. You also won’t have the aggravation of trying to evict the seemingly-nice couple who refuse to pay rent and have trashed your property. In most cases, you’ll rarely (if ever) have to even visit your property.
The second consideration when investing in land is financing. Getting a loan for any real estate investment can be difficult these days, as financial institutions easy money policies died with the recession of the late 2000s. Although it is often more difficult to obtain financing for land investments than it is for a primary residence that’s actually a good thing, because it has made seller financing the standard in land sales.
Seller financing is a boon for investors because terms are highly negotiable. Unlike a bank, a seller is likely to consider you a qualified buyer as long as you can prove you have sufficient funds to make the down payment and at least a few monthly installments. They’re often this lenient because they’re motivated to move the property. They’d certainly prefer to receive a lump sum payment, but most are happy just to establish a cash flow if they can’t negotiate payment in full.
Property taxes are another advantage to purchasing vacant land. You’ll only be paying tax on the land itself and not on structures, so your total yearly bill will be substantially lower. Taxes on large parcels can still be a drain, however, so be sure to take property taxes into account when evaluating land as an investment.
Know that you know some of the advantages are you ready to get investing? If so, give Asset Quest a call today.