How an invaluable resource can alter your REI perspective
“You’re quitting your job to do what?”
This was the most common response I received when I mentioned I was starting a land investing business.
Of course, my friends and family were just trying to look out for me, but their reaction was common even among investor circles.
Vacant land can seem like a poor investment choice to both real estate experts and novices.
This likely stems from raw land’s lower price points as well as a genuine lack of understanding about what rural, unimproved land can be used for.
Perhaps you had a similar reaction when you heard the term land investing.
Vacant land includes the forests, deserts, and bucolic grasslands that dot our large country.
To many people, land is not just a development opportunity, it is a way to spend more time with family or nature; it is pride of ownership and the opportunity to build a legacy.
There are myriad reasons why people buy vacant land, which means there are far more buyers out there than you may imagine.
And the great thing about rural vacant land is that it can be more affordable than other investment options.
So, if you are a savvy investor, you can make a decent profit trading in these parcels.
Here are a few facts about investing in land:
- It’s Affordable
Ironically, one of the benefits of rural vacant land is the price point.
Yes, you won’t sell your properties for hundreds of thousands of dollars, but you can also acquire properties for very little.
There are even areas in the U.S. where you can buy vacant land for under $1,000, making land a very accessible asset for new investors.
If you are already a seasoned real estate investor, it is also easy to justify setting aside a small portion of funds to play around with land at these prices.
- It Has Great Returns
Sure, no one deal will make you millions, but you can get returns of up to six times with a good system and a strong understanding of how to market land.
Of course, this means you must first understand the asset class and know how to find cheap land.
But you do need to know how to correctly value your land and complete your proper due diligence, so it may make sense to invest in training before you take the plunge.
- It’s Low Risk
There is a common misconception that rural vacant land is a risky investment.
This is because it does not typically have high rates of appreciation, but this only means that the buy and hold strategy is risky.
If you focus on flipping land and keeping your hold periods short, the risk can be very low.
Especially if you buy at the right price, offer attractive owner financing terms, and avoid higher–value parcels.
With lower–value properties, you can also diversify your portfolio by purchasing properties in many different states.
And again, the amount of capital that is at stake on each deal is low.
- There’s No Maintenance
With rural vacant land, there is no annual or monthly upkeep.
You don’t have any repairs to make or messes to clean up.
In fact, you often don’t have any ongoing costs other than property taxes, which are typically very low.
So, if you have little interest in maintenance or playing landlord, raw land can be a nice, no-hassle investment.
On top of this, because monthly carrying costs are low, it is easy to hold on to a property for a slightly longer time period if you hit a rough market.
- There’s Little Competition
As you may have gathered, there are very few people who understand the value of vacant land.
Most real estate investors are looking to break into the residential or commercial markets, which means there is little competition for you as a new land investor!
There are also hundreds of thousands of vacant land parcels throughout the U.S., decreasing investor competition.
Land investing can be a great opportunity if you are willing to look beyond the stereotypes and properly understand the asset class.
Whether you’re a first-time real estate investor or a seasoned pro, raw land can be a great addition to your suite of investments strategies.