Why Land is Usually a Solid Investment

Most real estate investors look to buy built-up property — houses, apartments, buildings, and condominiums. With the kind of demand in place for such real estate, reasonable prices are hard to find. It isn’t the same when you turn your sights to raw land. There tends to be little competition. As the cult classic Glengarry Glen Ross showed, real estate agents have a hard time moving land. If you’re in the market for it, you often get your pick, and prices tend to be reasonable. Should the general lack of interest worry you?

The truth is, investing in land, rather than built-up property, is an overlooked opportunity.

The cash flow misconception

Many people believe that land investments make little sense, because there is little that can be done with it — you can’t live on it or rent it out for income.

In reality, though, land is capable of producing virtual cash flow.  When all you have is vacant land, there is no cash outflow — in the form of pre-purchase inspections, construction, repairs, management or maintenance. Put together with the inherent tendency of property to appreciate in valuen, these savings do add up to some serious cash.

Buyers have negotiating power

Landowners tend to be eager to sell. Many live nowhere near their property, and feel that they should move on. This gives you far greater negotiating power then you would ever have trying to buy built-up property. It isn’t hard, usually, to find land that sells for pennies on the dollar.

Often, you can buy a parcel of land for what you would spend on down payment on something built-up. Once the land is yours, you can begin building on it. With property on it, the land immediately gains in value. You can buy cheaply and sell at a killer profit, with almost no gestation.

Land can be so cheap, you may buy without financing

Property sells for so little, you may be able to swing a deal without financing. If you do need financing, often, the seller will gladly do make an offer of his own. You simply need to agree to make a payment each month.

Looking out for your interests

According to Eastern Title and Settlement, Rockville, MD, there are a few mistakes that you should be careful of when you buy land.

People make the mistake of buying land without determining access rights. These aren’t a given. Land can be sold without reasonable access rights on a permanent basis. Some people will merely buy land on the basis of a promise of access through a neighbor’s property. Should the neighbor change his mind, though, everything could quickly go downhill.

It’s also important to look for land with basic utilities, drainage, water and sewer amenities. Mineral rights and timber rights are important, too. If you don’t have mineral rights, for example, you could lose your land in an instant, should coal or another mineral be discovered on it at some point.

Land would be a sound investment if all you ever got out of it was land appreciation over time. In reality, though, you do get much more.

Levvin Coffey
Content Concord is the writer behind belfieldrealestate.com, a blog focused on real-estate. She is a professional writer specializing in real-estate, business Investing and many other intellectual fields.

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