Can you guess what is one of the most overlooked types of real estate deals? If you guessed land, then you got it right. When getting into real estate, people’s attention automatically turns to properties. They start asking themselves questions like what type of property do they want, where do they want it to be and who will they rent or flip it to? As it turns out, you can do the exact same thing with land. It is so versatile in nature and contrary to popular belief, can involve extreme cash generating properties.
Pros of investing in land.
Most people are unsure of how to approach land as an investment. But don’t worry, we’ll get there. First, here are some reasons why it makes a good investment for those in real estate.
Minimal construction required. With land, there typically isn’t any major overhaul or construction required in the process – at least on your end. Construction may occur once you’ve sold or leased the land but it won’t be your obligation. This is unique compared to buying a physical real estate property. Think about fix and flip deals or even rental units. Generally, some level of construction or renovation is required on your end before you can do anything with the property. Investing in land bypasses all of these requirements.
Minimal maintenance required. Some people like the idea of real estate because they’re fooled into thinking properties are a hands-off investment. As we’ve discussed before, this is far from true unless you set it up in the right way. Land on the other hand can truly be a hands-off investment since you don’t have to deal with tenants or repair. In most cases, the people who lease the land from you will take care of maintenance as it relates to their own operations.
Low upkeep costs. Land can truly be an inexpensive long-term investment. There are negligible upkeep costs compared to typical real estate properties. You may have property insurance and taxes, but these will be minimal in the long run. Really, you can just let the land sit there and exist without fear about any damage occurring. Talk about peace of mind as a real estate investor.
Supply is finite. There’s only so much land in this world and no one is making more of it. If anything, we’re continuing to occupy more and more of it, making land even scarcer. With some solid research, there’s a good chance you can find a solid deal on land. If you’re lucky, it could become extremely valuable in the future to someone. For example, as residential or commercial property developments expand, companies are required to purchase or lease land from landowners. These investors probably make a pretty penny when commercial buyers come knocking at their doors.
Ability to create multiple lots. Depending on the size of your land property, you can divide it up into more manageable lots just like a house. This way, you can lease or sell each one individually if you choose to. The options are endless.
Different types of investments for raw land.
So if you think that land may be a good investment for you, here are some specific areas you can explore. Now remember, you don’t have to do this work yourself – that’s the beauty of owning land. You can choose to lease or even sell your land to companies that may engage in the following activities.
Residential or commercial property development
Agricultural purposes like crops, livestock, vineyards or orchards
Timber and forestry related uses
Mining and quarry related uses
The use of the property will depend on many variables pertaining to the land itself. Just remember, the fact that land just sits there can be a huge advantage to you as an investor. And just because it sits there doesn’t mean it can’t generate cash flow. Be sure to use these two features to your advantage as an investor.
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