Tips to Choosing the Right Land to Buy

Tips to Choosing the Right Land to Buy

With every investment you make, you always want to make the right choice. Land investing can yield great returns, but not all land is created equal. Anyone can buy cheap land in areas that are not built-up. However, this land will not provide the returns a person needs to make money on their investment.

In other words, there is right land to buy and wrong land to buy.

Tips to Choosing the Right Land

Land will always be in demand. However, there are a variety of factors that will determine if it’s a good piece of land and a smart investment.

Types

There are numerous types of land. This includes:

  • Raw Land: The cheapest land possible. Raw land does not have a home or building on the property. This is the best option for the investor who doesn’t have large upfront capital to spend on our next option.
  • Developed Land: Land with a home or structure will be considered developed. This is a good option due to the ability to rent the property or flip it for a profit.
  • Farmland: This is the perfect choice between affordability and a return on investment. Farmland can be leased to farmers with the intent of making money on the investment.

The land type that you choose will be dictated by your current capital. The one benefit to developed land is that you can secure a traditional mortgage or loan. Banks are less likely to provide a loan for a raw piece of land. However, with low costs, raw land will not cost you interest.

Location

Everyone knows that location is king in real estate. You can sell the same amount of land in New York for 30 times the cost of property in the middle of Alaska. Why? Demand and growth.

When purchasing land, you’ll want to:

  • Buy land in or near a major city.
  • Choose land in areas where urbanization is occurring.

If your land is in a "soon-to-be" location, you’ll be able to turn around and sell it for a much higher price in the near future. Land that is in the middle of the mountains is a great option for farmland or development, but don’t expect to sell the property at a premium unless urban growth is seen in the area.

Buy in Cash

There’s not many transactions you can make with cash that will drop the price of an investment greatly. Many parcels of land are sold buy owners that simply want to offload the property as quickly as possible.

You’ll find some owners willing to finance your sale, but this is not the optimal choice.

Cash is king. When buying your land, you’ll have far more negotiating power and receive a far lower price when paying in cash.

Cash payments are not a practical choice for most investments, but with land, you can find great pieces of land for a few thousand dollars.

The right piece of land for you depends on your needs. If you want to build on the land and live there, you’ll find opportunities are in abundance. If you want to buy land to sell it, you’ll want to follow the tips above to make the most from your investment.

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