While most investors believe in the power of buying and selling real estate, there is a relevant population that have made a fortune in the business of land acquisition and sales. While some shy away from land investment because there is not immediate cash flow, land investments can be very lucrative, and in almost all cases, much less convoluted than home sales.
One of the most obvious advantages of investing in land is the potential of diverse options an investor has. Build to rent, build to sell, or build and hold are the most popular options with investors. The goal of most investors is income, so build to rent is very popular in the right market. Premium homes built to collect premium rental rates are a great way to earn passive income.
The greatest part about investing in vacant land is the nearly limitless possibilities of use. In a world with shrinking available real estate, and new land development advancing at a historical rate, real estate developers have noticed the growing trend of offering newly built homes to clients.
A very important step in buying vacant land is to actually have an idea of where you intend to take the project. Is this going to be a quick buy and sell for profit deal, or do you plan to hold on to the land and hope to take advantage of appreciation over a few years? Another option is to build on the land, with intentions to either sell or tenant the property. With the right team on your side and the right connections in home building, one can easily build and make a profit off a new home sale, with less to worry about
Look to buy land where population seems to be growing, or a formidable company has established firmly planted roots. You always want to be ahead of the curve, especially in developing markets. Large build projects often point to a possible increase in future traffic to the area, and an assumed increase in job stability of the region. Regional development agencies should always be utilized if available, as they can offer a wealth of information on developmental forecasts. If you are buying a vacant lot in a neighborhood, how does the size and shape of the lot compare to the surroundings parcels? If the land you are purchasing is near any major rivers, marshlands or streams, is there a flood danger? These are all questions that should be answered before the land is purchased.
Using a real estate attorney to ensure that the land you are purchasing has a clear title, and no deed restrictions is always helpful. Although you might want to keep as few hands reaching into your profits as possible, due diligence should never be avoided!
Land is tangible, will not lose its value, and you cannot lose money on the deal, unless you haven’t done due diligence to ensure that you’re not overpaying. You never have to worry about property damage, break-ins, or non-paying tenants when dealing with vacant land. Unfortunately, the lack of tenants will produce a lack of passive income, so moving on the property build or sale is important if passive income is the expected result of your land purchase. Are you ready to invest in land? Give an expert member of the Asset Quest team a call today!