Investing in land can be a great way to boost and diversify your portfolio. It is a fairly low-maintenance and hassle-free way to increase your assets and overall wealth. In our latest post, we will take a look at some of the pros and cons of land investment in !
Land investment is often times overlooked, however it can be an excellent asset to any real estate portfolio. If you want to begin your investment journey, add to a portfolio, or find smart ways to diversify, land can be an excellent way to go.
Pros:
Low Cost
Land is cheap in comparison to other types of investments. Many people will find they only need to save up for a few months in order to generate enough cash to buy a lot. This opens the door to many people who want to begin investing but weren’t sure how to get their foot in the door. If you find the right property, you can buy low, sell it off or develop it, and use the profits for an even larger investment. Before you know it, you’ll be a real estate mogul and it all would have started with one small patch of dirt!
Low Maintenance
When you buy land, the is pretty much no work involved. It just sits there until the time is right for you to cash in. You might have to deal with small things, like keeping the lot free of brush and trash if it is in a residential neighborhood. You will not, however, need to deal with bad tenants, repairs, maintenance, or damage to your property.
Lower Taxes
Property taxes are much lower for land as opposed to lots with structures. Land can be a few hundred while a home can be a few thousand. These low holding costs are another reason why people love land investment so much.
It Can Be Developed
You can opt to develop the land yourself, adding a residential or commercial building depending on how the land is zoned. By creating something where there was once nothing, you will be able to generate tremendous profits renting it out or selling it off.
Make It Income Producing
Many people avoid land because it does not bring in any income. However, you can find creative ways to make it work for you. You can lease it to a neighbor so they have more room for their car or children’s play area. If it is a large parcel, and if it is allowed, you can lease the land to a hunter. You can use the lot for parking during special events if it is in a commercial area. There are many creative ways to make your land generate income.
Cons:
No Income
Land doesn’t typically bring in income unless you get creative with it. Of course, there are some exceptions as noted above, however, most of the time the property will sit until it is developed or resold. This is why you should look for land in developing areas, selling when it becomes a more “in demand” location.
Slower Appreciation
The value of land may not rise as quickly as housing would depending on your market. The profits you do see will likely be smaller than what you would find with a residential home.
Overall, adding land to your portfolio is a very safe and practical choice for new and seasoned investors. It is an excellent way to get into real estate investment as the costs to get started are very low in comparison to other types of investments. You should always keep land investment in mind when purchasing real estate.