Why Land is a Smart Investment

Why Land is a Smart Investment

Thinking of investing in land? Chances are, you’ve heard both sides of the land investment argument. Some say it’s a smart choice, while others believe that investing in land won’t provide you with an acceptable return. But you only need look to some successful investors, like Ted Turner, Jim Rogers and Warren Buffet to see just how valuable land investing can be. Each of these iconic figures invest portions of their net worth in timberland and farmland. So, why is land such a smart investment?

Land is Tangible

For starters, land is a tangible asset. It can’t be downgraded to zero like paper assets can be. Even if the land market were to crash tomorrow, you could still walk on your property. It won’t suddenly disappear into thin air.

Provided you pay your property taxes each year, land is an investment that can’t be easily taken away from you. With paper assets, like stocks, you could lose all of the hard-earned money you invested in a matter of hours.

Land is Adaptive

Land has the remarkable ability to adapt and evolve over time. Maybe the land is being used to grow crops right now, but in the future, it may be used as a park or recreational area.

Because land can adapt to a changing economic landscape or whatever your needs may be, it will always be a valuable asset.

Land is a Slow – But Steady – Investment

Historically, land has never really been a volatile asset. As a result, it’s slowly increases in value. On average, land appreciates by two to five percent each year. The returns may be slower than other investments, but they’re steady and long-term.

If you choose to invest in farmland, you can also gain additional income from leasing your land or selling crops.

Land is in Limited Supply

A wise man named Mark Twain once said, "Buy land, they’re not making it anymore." Mark Twain hit the nail on the head with that statement. There’s only so much land on this planet, and as the population continues to increase, land "supplies" will start running low.

Demand for land will only continue to rise in the future, which could mean a higher return for you in the long run.

Land Investing Isn’t Foolproof

While land can be a smart investment, it’s not foolproof. You can’t just purchase any piece of property and expect to get a good return on it. To get the best ROI, you need to know where to buy and how to generate income with the land. Raw land isn’t the worst investment, but it can cost you money (taxes, upkeep, maintenance, etc.) in the long run. Farmland, timberland and recreational land, on the other hand, can produce income and generate a higher return.

Land is a smart investment if you know where and when to buy it. It’s an asset that will always be in high demand, is adaptive, provides a steady return and is tangible. Investing in land that has the potential to produce income will provide you an even higher return in the long run.

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