Why Investing In Vacant Land Can Make You Money

Why Investing In Vacant Land Can Make You Money

The dollar sales volume for all types of land in the US increased, on average, by 2.2% during the period October 2028 to September 2019 compared to the previous year. Residential land grew the most, followed by land for recreational facilities and terrain for industrial use. Agricultural land without irrigation posted the slowest sales growth. Nonetheless, increasing vacant land sales suggest that betting on land as an investment has the potential to yield money. Here’s why.

Land Is A Limited Resource 

There is a finite amount of land available to buy, build on, or reclaim: nobody can make land. As populations and economies grow, more land is needed to build houses, set up infrastructures, establish factories and offices, open recreational facilities, and so on. The value of land tends to appreciate over time – if the proper appraisal has been done.

In other words, before investing in land, it is vital to hire professional appraisers that will determine the market value of a property. For example, land can be rented or leased, giving income to its owner. But, to determine if it is a viable property that can bring in money, the experts will look at the size, location, amenities and condition to determine the amount of revenue that vacant land can generate. Water and mineral rights will also be assessed so that you can find the best deals when purchasing raw land.

Another approach is to estimate the cost of constructing a structure based on current prices less depreciation plus land purchase to measure the value of the property. What land is worth can also be gauged by comparing recent sales figures of properties that are similar in the area or neighboring locations. Historic data can also be compared to estimate the value of vacant land.

Owning A Piece Of Land Is A Win-Win Investment

On the bright side, holding on to land offers several advantages. It requires little to no maintenance. Unlike buildings and houses that might require repair or renovation, vacant plots need little work, apart from mowing the lawn or pruning trees and shrubs to keep them in a good condition. It does not take up a lot of time, and offers a great investment opportunity for people who do not want to deal with stress.

Unlike real estate investments, vacant land is less competitive. This means that it may be easier to get your hands on undervalued land that can provide you with significant returns later.  Furthermore, vacant land is expected to appreciate in value in the long term. To illustrate, areas that are under development or being rezoned for commercial or industrial purposes will experience spikes in land prices. If you happen to own land in these places, you can earn a nice profit from selling your land. Even if you do not intend to let go of your property immediately, you can hold on to it and wait for a tempting price, or lease it to a farmer or a business to generate passive income.

The bottom line is that land is a tangible and low-maintenance asset that you can buy without paying a hefty price, unlike some real estate properties. It can make you money when you sell it for a profit, or lease or rent it to individuals or companies.

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