While it is certainly profitable when done right, investing in land can also be challenging. It takes time, patience, and often requires a large initial investment. But there are also many ways to earn a profit from undeveloped land. It can be leased for farming, hunting, and storage, or you can sell off the resource rights to energy and material companies.
There is also the opportunity to subdivide the land and sell the lot bit by bit. This takes time and energy, as you need to find multiple buyers, but it can allow you to create a profit once everything is sold. You could also buy and hold the land, allowing the age-old principle of appreciation to do it’s work. Land has the potential (and the track record) to become more valuable over time, so this is a good way to create a stable portfolio,
Of course, there is also the chance to improve the land through developments. While costly, improving the land can help you bring in a wide variety of buyers, and it lets you choose the specific purpose of the property. If you can withstand the price, as well as the time involved in development, you can turn undeveloped land into a massive profit.
If you are considering investing in undeveloped land, make sure you do it right. Nothing is guaranteed, so use these simple tips to increase your chances of longterm success…
Investing in Land: Simple Tips to Increase Your Chances of Success
Decide if Investing is Really Right for You
This is likely the most important part of investing in land: deciding whether it’s right for you. Yes, undeveloped land can be extremely profitable, but it can also be extremely risky. It requires meticulous planning and lots of effort on your part. You will also need the capital to tolerate long period without an income, as undeveloped land often takes years or even decades to create a return. In many cases, it may be best to avoid undeveloped land if you are just starting into real estate development.
Stay In or Near Major Markets
Okay, you’re ready to invest? Then your first steps will be to actually start researching various properties. It is likely wise to begin by looking at land that is in or near major markets and larger cities. Yes, you can likely get a cheap deal by looking for property in remote or rural areas, but what will you do with that land? If you have a low tolerance for risk, stay near primary markets with larger populations and more economic activity.
Look for Land That Could Entice a Variety of Users or Buyers
The more people who will be interested in purchasing your land, the better chance you have at turning a profit. For this reason, it may be unwise to purchase land that only has one potential use. The more specialized the land, the harder it will be to find a buyer, so search for land (and create developments) that can be enticing to multiple buyers.
Purchase Income-Producing Land
When most investors think of undeveloped land, the generally think of long timeframes from purchase to income. They assume investing in land means purchasing the land and either developing it or waiting for appreciation, then selling for a profit, usually years later. However, it is possible to purchase undeveloped land that brings an income right away, such as land that can be used for farming, resources, or storage.
Get Reports Before Purchasing
Before buying anything, make sure your property is thoroughly inspected. The more information you can generate on the property, the better chance you will have at purchasing a profitable piece of land. (And avoiding a financial disaster!) Before you make a purchase, get professional topography and soil reports on the land. Surveys and title reports are also recommended when investing in land.
Walk Around the Lot
Complex legal and scientific research is always required, but sometimes it helps to simply walk around the land. Take the time to thoroughly inspect the lot you are purchasing to make sure there are no serious issues, such as poor drainage.
Research Future Plans for the Area
You need to know what your neighbors, as well as the local and state governments, have planned for the area. Will there be a new park? That could increase your property’s value. Will there be a new waste-water treatment facility? That could reduce the property’s value. Nothing is certain, but understanding the future plans for areas near the property is incredibly important for your purchase.
Understand the Zoning for this Land
Zoning sounds simple, but it can be highly complex. Make sure you are aware of all zoning restrictions in the area so you don’t purchase land that you are unable to use. (Or at least, unable to use for your intended purpose.)
Above All, Patience Matters
There are many details, tips, strategies, and techniques you can use to increase your chances of profit. But above all, you simply need to be patient when investing in land. Don’t fall in love with properties, but instead take a cool, calculated approach to each and every purchase. Remember that you are buying an investment, not a personal home, so be patient, take your time, and always be prepared to walk away from any purchase; after all, there will always be another property to consider.
If You Are Investing in Land, Get the Right Loan for Your Needs
Investing in land is a wonderful chance to earn a top-quality income, but you need to have the right loan for your specific needs. Whether you want to pay off the loan quickly or maximize your monthly cash flow, we can find an investment loan that is right for you.
I was referred to Chad by my Realtor for a purchase of a new house. The experience with Chad and the team (I mainly worked with Juliann) was nothing short of outstanding. From start to finish there were always quick to respond and when needed, notify me of any new documentation that was required. There were very helpful explaining to me the pros and cons of different financing options as well as some other loan related issues, such as termite clearance outside the purchase contact and septic tank certification process. Overall, very knowledgeable and processional team. Loan preapproval was done in a single day and loan documents were ready for signing in 21 days, which was 9 days ahead of schedule. That never happened to me before.
A very responsible and experienced professional with his highly effective team
I really enjoyed working with Chad Baker and the rest of the team. This was our first time buying a home in California and we started with unnecessary assumptions based on our previous experience as home-owners in a different state. Chad and his team were available throughout the whole process, explaining the state differences, answering all our phone calls and emails quickly and directly, and providing detailed weekly status reports so that all parties including agents knew exactly where we were in the process. Chad was very experienced and provided customized loan products for us to consider, which definitely facilitated our transaction. I recommend the Chad Baker team! ”
“Chad, it was a pleasure working with you. Your loan was smooth, speedy, and we were kept well informed. I will make sure to prioritize offers where you are the loan officer as I know they run smoothly.”