Do you have money that you could put into real estate? If so, it might be a good idea for you to buy land. Land is a great investment because its value doesn’t change as much as stocks or bonds, and it tends to go up over time.
You can buy undeveloped land that has the potential to be built on, or you can just have the right to use the land without owning it.
WHAT DOES RAW LAND MEAN?
Raw land is a piece of land that hasn’t been built on or developed in any way. It is completely untouched terrain. Raw land investments are becoming more popular among real estate investors, even though the land doesn’t have to be graded or divided for building. This makes me wonder if everyone should buy land as an investment. Not surprisingly, the answer depends entirely on what a particular investor wants out of a deal.
Some people might think it’s odd to put money into undeveloped land. Similarly, investing in land calls for a longer time horizon and a more patient approach. Consequently, there are a variety of motivations for investing in undeveloped land. More specifically, investors with the foresight to buy raw land have the freedom to create whatever they want with the space. Even more importantly, investing in undeveloped land is now commonly associated with stable returns and price growth.
LAND PURCHASES CAN BE PROFITABLE IN A FEW WAYS:
Put the land up for sale.
The land can be held onto and sold at a later date. Gains can be substantial, but only if you research local land appreciation trends. Clearing, levelling, and prepping land for construction can also significantly increase its value.
GARAGE FOR BOATS.
Renting out your land for storage is a straightforward way to generate income from your property. Because boat owners can leave their vessels on your property year-round, you can expect to see a lot of them between the months of November and March. Some storage facilities charge $125 or more monthly to store a houseboat.
START TIMBER FORESTING.
The trees on your property are worth a lot. Many landowners who decide to plant trees intend to keep the land and eventually profit from the timber. Additionally, you can use the trees to start your own firewood enterprise and profit from the wood harvest in the fall and winter. The length of time it takes for a tree to mature and be useful as a source of timber depends on the species of tree being used. The age of maturity ranges from seven years to fifty years, depending on the species of wood used.
VAN STORAGE.
Most people who own recreational vehicles (RVs) don’t have enough room in their driveways to park them permanently. Recreational vehicles (RVs) fill the storage lots, and all you need is a patch of empty land to park one. You’ll need to clear a path through the area, but that shouldn’t be too difficult. Monthly storage costs can range anywhere from $50 to $400. Though indoor storage is preferable, if you can accommodate 10 recreational vehicles on your property and charge each one $50 per month, you’ll have an easy $500.
CAMPGROUND.
As urban areas expand, more and more people are choosing to spend their vacations in tents. Spending some time in a quiet, natural setting away from the hustle and bustle of the city can be all that some people need to feel at peace with themselves again. For many, the fact that camping grounds are conveniently located throughout the world is excellent news. People will gladly pay you to let them camp on your property. Recently, I investigated a campground that was sitting idle on private land. Ten or more campsites could be set up on the land for just $20 or $25 per night, for a total of $200 to $250 per night in potential camping fees. It is important to research the cost of insurance for a business of this nature.
SOLAR ENERGY.
This can be a very lucrative option for you if you either have the capital to install solar panels on your land or are willing to rent the land to a company that wants to install solar panels on your land. The point is to team up with energy providers or businesses interested in buying the solar power you generate. Numerous new companies are setting up their own solar farms and selling excess power to utilities. You have the option of either working with these companies or shouldering the initial expenses on your own.
CORRIDOR FOR HORSES.
The equestrian business is thriving. Although many would love to, they simply do not have the space to keep horses. You may keep horses in your own stables or permit horseback riding on your property. Some horse owners charge $400 or more per month because they built their own stable for their equines. In major urban centres, you’ll find that these costs are even higher. If you have a couple of acres of land, build a stable, and clear a space for riding, you can charge top dollar. However, you should do your homework in your area first.
THREE SIMPLER WAYS
How exactly do you turn a profit off of land? It’s common knowledge that real estate investments can lead to substantial financial gain, and few would need convincing that this is the case. They hear about the huge returns that land investors can make, but they don’t know what those investors actually do with the land.
We’ve tried our hand at a wide variety of real estate business models, including construction, leasing, contract trading, wholesaling, etc. However, I think that simple land investments offer the best returns with the lowest risk. A land appreciation investment is one in which a single investor or a partnership buys a piece of land with the intention of selling it at a profit.
So, how do we increase the value of land holdings so that we can sell them for more money? This article provides three simple solutions that can be implemented immediately to start raising prices. The next article, Part 2, will focus on the other three, which require more time and explanation. There are six tried-and-true methods of making money from land.
THREE EASY WAYS TO MAKE MONEY FROM LAND
HOLD IT.
Real estate in the expansion zones of major cities typically increases in value by double digits every year. Does that growth happen in bursts lasting several years, as a result of the region’s economic cycle? Land appreciates at a much higher rate than developed property does as a metro area expands for reasons I’ve discussed in other articles. Land for new developments may be appreciating at a rate of 15-20% per year, while houses and small commercial buildings in established areas may only see appreciation of 5-6% annually. When you factor in the potential for acquiring land at a discount to its current market value, you have a recipe for incredible profits. Many of the properties we’ve bought have increased in value by as much as 50% annually for three to four years, allowing us to sell them for 3.5 to 4 times our initial investment.
CUT UP BIG PIECES INTO LITTLE ONES.
New land investors, especially those with experience only in the rental or single-family home markets, tend to overlook this tactic. Investors in land, unlike buyers of buildings, can benefit greatly from bulk purchases. Even in the same market, smaller plots of land fetch a higher price per acre (or per foot) than larger plots do.
Investing in land thus becomes as easy as buying in bulk and selling it off piece by piece. To avoid the expense and hassle of obtaining the necessary permits for a full subdivision, most counties will allow investors to make a limited number of splits. A simple, over-the-counter split into pieces ranging in size from three to five can have a significant effect on the value of a whole.
WANT TO BUY AND SELL ON TERMS? BUY CASH FIRST.
With a reasonable down payment, the selling price of an asset goes up whenever the seller is willing to carry. The value boost is especially noticeable in markets where obtaining financing is difficult.
Home builders are common purchasers of residential land. Insufficient funds to purchase land and cover the high cost of construction is a perennial issue for builders. Sellers who are willing to carry make their property more appealing to developers.
The strategy of cutting large items into manageable chunks and then carrying them can be very profitable, even if the underlying purchase or market dynamics are unremarkable.
Let’s use the 73-acre piece of land I just purchased with a business associate as an example. We paid in cash at a rate of slightly under $5,000 per acre. A little bit more than that was the property’s market value when we bought it (we found a decent deal). We only intend to keep it for as long as necessary to qualify for long-term capital gains treatment. During that time period of holding, I anticipate a moderate but not excessive increase in value. The land will be subdivided into five estate lots, each measuring nearly 15 acres, and offered for sale at $12,500 per acre with a 3- to 5-year carry option at 7 to 8 percent. The key point here is that this transaction is not exceptional in any way.
LAND INVESTMENT TIPS: HOW TO INVEST IN LAND AND PROFIT
Now that we know raw land investment can be profitable, we can examine the various ways that investors can make money off of it.
- To maximise the profit from a plot of land, divide it into several smaller plots.
- The value and utility of undeveloped land can be increased by developing it.
- You should probably invest in raw land and hold on to it because it has appreciated in value over time.
- Rent the land out for various purposes by leasing it either temporarily or permanently.
SUBDIVIDE FOR LAND SALES
Subdividing raw land for residential or commercial development is the first step for investors looking to profit from their land purchase. Separating a large parcel of land into smaller lots and selling them to individual buyers can increase the total value of the investment for the investor. The value of the land after subdivision often exceeds that of the original tract. It’s more likely that a buyer will be found for a smaller, more affordable plot of land than for a single large lot, and this is due to marketability.
When raw land is subdivided, two things must be done: make a map, and make legal documents. In terms of mapping, we’re talking about the boundaries of the proposed subdivision. Concurrently, the legal paperwork involves submitting the proposed subdivision to the local county, which typically includes an application and fee. Assuming the application is accepted, the subdivision’s proposed map will be entered into the county’s official records.
Build it up!
One of raw land investing’s greatest strengths is its adaptability, which remains important as urban areas grow. Developing vacant land is a common strategy for many investors looking to profit from real estate.
An investment in raw land could be used to construct anything from a single-family home to an apartment complex to a commercial building, depending on the area and zoning regulations. An investment in raw land may have the potential to be developed into several different businesses, providing investors with a wide range of potential returns. Over time, this property’s value as a place to live rises, which in turn drives up rental costs.
BUY AND HOLD
Price inflation makes capital appreciation a primary means of return for raw land investments. Investing in undeveloped land now could yield substantial returns in the future if land prices continue to rise.
More than that, investors can find a number of opportunities to acquire raw land at prices that are below the current market price. Investors can increase their chances of making a profit by purchasing land at a discount through a variety of channels, such as auctions and county tax sales. Additionally, buyers at auctions for land should do their homework. These transactions often carry a high degree of danger with negligible reward.
Rent It
Monthly and annual land leases are in demand by many companies. Undeveloped land is typically required for these kinds of businesses. Individuals and businesses can lease land instead of buying it through a land lease or ground lease. A raw land investment also has additional leasing options. Renting out billboards, cell phone towers, ranches, and utility companies all fall under this category. Making money through leasing is similar to many other business models. The purpose of securing a lease is to generate monthly income from the property.
Investing in any form of real estate carries some measure of uncertainty, and purchasing raw land is no different. Learning more about the topic can give you the assurance to get started and the knowledge to see it through to a successful conclusion. Find out where to get the money to buy raw land, what kind of land to buy, and what to do with it after you do. By following these suggestions, you may be able to gain access to substantial profit margins from a rarely used real estate investing strategy.
Vacant land can be a lucrative investment for the right buyer, but it’s important to be well-informed before making a purchase.
Why is the land vacant, for example, is a crucial question to ponder. It’s important to pay the land in question a personal visit and learn as much as possible about its condition, including zoning regulations, environmental hazards, and availability of infrastructure services like water and electricity.
If you’re just starting out, your best bet is to do lots of homework and connect with an experienced mentor or real estate agent who can help you navigate the market.
Keep in mind that buying undeveloped land is not a quick way to amass wealth like some other investments. However, when done correctly and by the right person, it can be a worthwhile investment.
Conclusion
Land is a great investment because its value doesn’t change as much as stocks or bonds, and it tends to go up over time. Raw land is a piece of land that hasn’t been built on or developed in any way, and is becoming more popular among real estate investors. It offers the freedom to create whatever they want with the space, and is associated with stable returns and price growth. Land purchases can be profitable in a few ways, such as putting the land up for sale, renting out land for storage, and clearing, levelling, and prepping land for construction. The most important details in this text are the benefits of timber forestry, van storage, camping, and golfing.
Timber forests are worth a lot, and can be used to start a firewood enterprise and profit from the wood harvest in the fall and winter. Van storage can be done by clearing a path through an empty land and charging $50 per month for 10 recreational vehicles, while camping grounds can be set up for just $20 or $25 per night for 10 or more campsites for a total of $200 to $250 per night. It is important to research the cost of insurance for a business of this nature. Solar energy can be a lucrative option if you have the capital to install solar panels on your land or are willing to rent the land to a company. Corriding for horses can also be profitable, but it is important to do your homework in order to make a profit.
Real estate investments can also lead to substantial financial gain, but many don’t know what to do with the land. The most important details are that land appreciation investments offer the best returns with the lowest risk, and that real estate in the expansion zones of major cities typically increases in value by double digits every year. This article provides three simple solutions to increase the value of land holdings, which can be implemented immediately to start raising prices. The next article, Part 2, will focus on the other three, which require more time and explanation. Land investors can benefit greatly from bulk purchases, as smaller plots of land fetch a higher price per acre (or per foot) than larger plots.
To avoid the expense and hassle of obtaining the necessary permits for a full subdivision, most counties will allow investors to make a limited number of splits. Buy cash first, as the selling price of an asset goes up whenever the seller is willing to carry. Sellers who are willing to carry make their property more appealing to developers. An example of this is a 73-acre piece of land purchased with a business associate. The land will be subdivided into five estate lots and offered for sale at $12,500 per acre with a 3- to 5-year carry option at 7 to 8 percent.
Raw land investment can be profitable, and can be divided into smaller plots for residential or commercial development. It can also be used to construct anything from a single-family home to an apartment complex to a commercial building, and can have the potential to be developed into several different businesses. Investing in raw land can yield substantial returns in the future if land prices continue to rise, and investors can find a number of opportunities to acquire raw land.
Content Summary:
- Do you have money that you could put into real estate?
- If so, it might be a good idea for you to buy land.
- Land is a great investment because its value doesn’t change as much as stocks or bonds, and it tends to go up over time.
- You can buy undeveloped land that has the potential to be built on, or you can just have the right to use the land without owning it.
- Raw land is a piece of land that hasn’t been built on or developed in any way.
- It is completely untouched terrain.
- Raw land investments are becoming more popular among real estate investors, even though the land doesn’t have to be graded or divided for building.
- This makes me wonder if everyone should buy land as an investment.
- Not surprisingly, the answer depends entirely on what a particular investor wants out of a deal.
- Some people might think it’s odd to put money into undeveloped land.
- Similarly, investing in land calls for a longer time horizon and a more patient approach.
- Consequently, there are a variety of motivations for investing in undeveloped land.
- More specifically, investors with the foresight to buy raw land have the freedom to create whatever they want with the space.
- Even more importantly, investing in undeveloped land is now commonly associated with stable returns and price growth.
- Gains can be substantial, but only if you research local land appreciation trends.
- Clearing, levelling, and prepping land for construction can also significantly increase its value.
- Renting out your land for storage is a straightforward way to generate income from your property.
- Some storage facilities charge $125 or more monthly to store a houseboat.
- The trees on your property are worth a lot.
- Many landowners who decide to plant trees intend to keep the land and eventually profit from the timber.
- Additionally, you can use the trees to start your own firewood enterprise and profit from the wood harvest in the fall and winter.
- The length of time it takes for a tree to mature and be useful as a source of timber depends on the species of tree being used.
- The age of maturity ranges from seven years to fifty years, depending on the species of wood used.
- Most people who own recreational vehicles (RVs) don’t have enough room in their driveways to park them permanently.
- Recreational vehicles (RVs) fill the storage lots, and all you need is a patch of empty land to park one.
- You’ll need to clear a path through the area, but that shouldn’t be too difficult.
- Monthly storage costs can range anywhere from $50 to $400.
- Though indoor storage is preferable, if you can accommodate 10 recreational vehicles on your property and charge each one $50 per month, you’ll have an easy
- As urban areas expand, more and more people are choosing to spend their vacations in tents.
- Spending some time in a quiet, natural setting away from the hustle and bustle of the city can be all that some people need to feel at peace with themselves again.
- For many, the fact that camping grounds are conveniently located throughout the world is excellent news.
- People will gladly pay you to let them camp on your property.
- Recently, I investigated a campground that was sitting idle on private land.
- Ten or more campsites could be set up on the land for just $20 or $25 per night, for a total of $200 to $250 per night in potential camping fees.
- It is important to research the cost of insurance for a business of this nature.
- This can be a very lucrative option for you if you either have the capital to install solar panels on your land or are willing to rent the land to a company that wants to install solar panels on your land.
- The point is to team up with energy providers or businesses interested in buying the solar power you generate.
- Numerous new companies are setting up their own solar farms and selling excess power to utilities.
- You have the option of either working with these companies or shouldering the initial expenses on your own.
- The equestrian business is thriving.
- Although many would love to, they simply do not have the space to keep horses.
- You may keep horses in your own stables or permit horseback riding on your property.
- Some horse owners charge $400 or more per month because they built their own stable for their equines.
- If you have a couple of acres of land, build a stable, and clear a space for riding, you can charge top dollar.
- However, you should do your homework in your area first.
- How exactly do you turn a profit off of land?
- It’s common knowledge that real estate investments can lead to substantial financial gain, and few would need convincing that this is the case.
- They hear about the huge returns that land investors can make, but they don’t know what those investors actually do with the land.
- We’ve tried our hand at a wide variety of real estate business models, including construction, leasing, contract trading, wholesaling, etc.
- However, I think that simple land investments offer the best returns with the lowest risk.
- A land appreciation investment is one in which a single investor or a partnership buys a piece of land with the intention of selling it at a profit.
- So, how do we increase the value of land holdings so that we can sell them for more money?
- This article provides three simple solutions that can be implemented immediately to start raising prices.
- The next article, Part 2, will focus on the other three, which require more time and explanation.
- There are six tried-and-true methods of making money from land.
- Real estate in the expansion zones of major cities typically increases in value by double digits every year.
- Does that growth happen in bursts lasting several years, as a result of the region’s economic cycle?
- Land appreciates at a much higher rate than developed property does as a metro area expands for reasons I’ve discussed in other articles.
- Land for new developments may be appreciating at a rate of 15-20% per year, while houses and small commercial buildings in established areas may only see appreciation of 5-6% annually.
- When you factor in the potential for acquiring land at a discount to its current market value, you have a recipe for incredible profits.
- Many of the properties we’ve bought have increased in value by as much as 50% annually for three to four years, allowing us to sell them for 3.5 to 4 times our initial investment.
- New land investors, especially those with experience only in the rental or single-family home markets, tend to overlook this tactic.
- Investors in land, unlike buyers of buildings, can benefit greatly from bulk purchases.
- Even in the same market, smaller plots of land fetch a higher price per acre (or per foot) than larger plots do.
- Investing in land thus becomes as easy as buying in bulk and selling it off piece by piece.
- To avoid the expense and hassle of obtaining the necessary permits for a full subdivision, most counties will allow investors to make a limited number of splits.
- A simple, over-the-counter split into pieces ranging in size from three to five can have a significant effect on the value of a whole.
- With a reasonable down payment, the selling price of an asset goes up whenever the seller is willing to carry.
- The value boost is especially noticeable in markets where obtaining financing is difficult.
- Home builders are common purchasers of residential land.
- Insufficient funds to purchase land and cover the high cost of construction is a perennial issue for builders.
- Sellers who are willing to carry make their property more appealing to developers.
- The strategy of cutting large items into manageable chunks and then carrying them can be very profitable, even if the underlying purchase or market dynamics are unremarkable.
- Let’s use the 73-acre piece of land I just purchased with a business associate as an example.
- We paid in cash at a rate of slightly under $5,000 per acre.
- A little bit more than that was the property’s market value when we bought it (we found a decent deal).
- We only intend to keep it for as long as necessary to qualify for long-term capital gains treatment.
- During that time period of holding, I anticipate a moderate but not excessive increase in value.
- The land will be subdivided into five estate lots, each measuring nearly 15 acres, and offered for sale at $12,500 per acre with a 3- to 5-year carry option at 7 to 8 percent.
- The key point here is that this transaction is not exceptional in any way.
- Now that we know raw land investment can be profitable, we can examine the various ways that investors can make money off of it.
- To maximise the profit from a plot of land, divide it into several smaller plots.
- The value and utility of undeveloped land can be increased by developing it.
- You should probably invest in raw land and hold on to it because it has appreciated in value over time.
- Rent the land out for various purposes by leasing it either temporarily or permanently.
- Subdividing raw land for residential or commercial development is the first step for investors looking to profit from their land purchase.
- Separating a large parcel of land into smaller lots and selling them to individual buyers can increase the total value of the investment for the investor.
- The value of the land after subdivision often exceeds that of the original tract.
- It’s more likely that a buyer will be found for a smaller, more affordable plot of land than for a single large lot, and this is due to marketability.
- When raw land is subdivided, two things must be done: make a map, and make legal documents.
- In terms of mapping, we’re talking about the boundaries of the proposed subdivision.
- Concurrently, the legal paperwork involves submitting the proposed subdivision to the local county, which typically includes an application and fee.
- Assuming the application is accepted, the subdivision’s proposed map will be entered into the county’s official records.
- Build it up!
- One of raw land investing’s greatest strengths is its adaptability, which remains important as urban areas grow.
- Developing vacant land is a common strategy for many investors looking to profit from real estate.
- An investment in raw land could be used to construct anything from a single-family home to an apartment complex to a commercial building, depending on the area and zoning regulations.
- An investment in raw land may have the potential to be developed into several different businesses, providing investors with a wide range of potential returns.
- Over time, this property’s value as a place to live rises, which in turn drives up rental costs.
- Price inflation makes capital appreciation a primary means of return for raw land investments.
FAQs About Buying Land
What should I consider when buying land?
Before buying land, it’s important to consider a variety of factors such as the location, size, topography, zoning restrictions, soil quality, access to utilities, and any potential environmental hazards or restrictions. You’ll also want to think about your long-term goals for the property, such as whether you plan to develop it or use it for recreational purposes.
How do I know if the land is worth the asking price?
To determine if a piece of land is worth the asking price, you can conduct a market analysis of similar properties in the area. You can also hire a professional appraiser to evaluate the land and provide an estimate of its value.
What kind of inspections should I have done before buying land?
It’s important to have a thorough inspection of the land done before purchasing it. This may include a survey to determine the exact boundaries of the property, a soil test to assess the soil quality, and an environmental inspection to identify any potential hazards or restrictions on the property.
What kind of financing options are available for buying land?
There are a variety of financing options available for buying land, including traditional mortgages, land loans, and owner financing. You’ll want to consider the interest rates, terms, and fees associated with each option to determine which one is right for you.
What kind of legal considerations should I be aware of when buying land?
When buying land, it’s important to work with a qualified real estate attorney who can help you navigate any legal issues related to the property. Some potential legal considerations may include zoning restrictions, environmental regulations, easements, and any existing liens or encumbrances on the property.
