Invest in Land as Real Estate Costs Rise

Invest in Land as Real Estate Costs Rise

Everywhere you look, you’ll read that the economy is finally getting back on track. Rising real estate prices and strong job growth are both signs of a recovery. Many new investors are leery to invest in land as prices rise, but this is an unfounded concern.

Land prices are still remaining relatively low at the moment.

Due in part to the influx of foreclosures over the past few years, land is still able to be purchased for less than $5,000 in a lot of cases. In fact, land can be found in some of the most beautiful locations in the country, such as Florida and California.

Vacant Land is Ideal

Vacant land is the ideal option. Land that is void of any buildings or structures is the best choice to buy. Why?

Vacant land is:

  • Far cheaper than land with even a small structure.
  • Often approved for building.
  • Relished with the possibility of building and selling.

Vacant land provides an immense possibility to the owner. As an owner of vacant land, you have many options available to you.

  • Keep the land as-is for a long-term investment.
  • Prepare the land for building and flip it as a profit.
  • Build on the land and sell it at a major price increase.

Long-term, land prices continue to increase as the population grows. The only downside to land as a long-term investment is that some property taxes will exist. The good news is that property taxes are much lower on vacant land than on land with a home.

Clearing land, adding in utility lines and securing building permits will raise the value of your land greatly. Many investors choose to sell their land at this point at a severe price increase to potential buyers looking to build their dream home.

Farmland is another optimal solution. With farmland, the land can be leased to farmers for grazing. In this scenario, your land will produce an immediate income which other land purchases will not offer until they’re sold.

The Right Choice for a Sale

Currently, real estate is a hot market. Investors with a lot of capital will want to look at the possibility of buying land with the intent of building on the property. Many areas are seeing real estate increases as much as 4% from one month to the next.

Land that has a home is also much more valuable and provides a higher ROI. But, coming up with the capital to build a home will keep some investors from building.

If capital is an issue, holding onto the land and providing basic utility access is a smart choice. In areas where homes are being built, your lot’s price will increase greatly as land becomes scarcer. In this scenario, it’s often best to wait to sell your land until prices have tripled or quadrupled.

Remember, costs will be incurred over the lifetime of your investment. Land will require you to pay taxes and perform basic upkeep.

Making the choice to buy land in opportune locations is the best option. As real estate costs rise, so will the cost of raw land in popular locations.

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