You know what they say – the best investment on Earth is earth. Land – unlike other real real estate assets like multifamily, single family homes, office buildings, etc. – is one of those things that they’re just not making more of. So, whether you’re looking for a great way to diversify your portfolio, are curious about investing in land, or are thinking about starting a land investing side business, read on to learn more about the ins and outs of investing in land.
What Is Land Investment?
Land investment is a type of real estate investment. It’s typically very profitable because of its low cost and high turnaround rate. Most land investments don’t require much work from the investor but do require someone who understands how to make profit.
To invest in land, you purchase a plot of undeveloped or vacant land. The plot of land you purchase may be in a variety of locations, such as a city, a rural area, near water, and much more. Once the land is purchased, you have many different ways you can profit from this investment.
How Do You Profit From Land Investing?
One of the benefits of land investment is that you can earn profit in a multitude of ways if you buy the right plot of land at the right price. For example, if you have an area with good soil, you may want to rent the land to a farmer. If you acquire land in a dense metroplex, it could be great for a parking lot or development opportunities.
Ultimately, you can choose from several options. This includes, but isn’t limited to:
- Holding the property until it’s worth more money
- Flipping the land so the area is developed
- Renting the land
- Financing the property to a buyer
What Type Of Land Should You Buy?
One of the key land investing tips is to closely research the type of land that you are buying to make sure it has all the qualities you need. The qualities of the land you buy depends on how you want to profit. Investigate what type of land meets your needs.
Similarly, think about your exit plan – how long will you hold the land, and who would ultimately want to buy it?
For example, does the area need good soil for farming? Is water, road, and utility access important? Do you need timber or other similar qualities?
If the land is being acquired for development, identify what types of developers might be interested. Is the land close to public transit or other amenities? Closely researching the land will help you identify the right buyers and thus maximize your profit.
If you want to invest in land but don’t want to do the work of actively managing the land or the acquisition or disposition, you can also look into syndications (group investments) that invest in land.
Helpful Land Investing Tips
Before you invest in land, there are many important things that you should consider. Ask yourself:
- Does the land need access to roads, water, and utilities?
- Is the condition of the soil, water, foundation, etc. suitable for your investment?
- Are there any specific zoning laws or regulations?
- Is the land in an in-demand and profitable area?
- Are you approved for a loan?
- Do you have an agency that can support you?
- Have you considered taxes and extra expenses?
In addition, having land quality reports done of the area will help guarantee it’s the right plot of land for you. Additionally, working with a financial advisor or others who have invested in land before can help answer questions about loans and other expenses. And most importantly, working with investment pros is perfect for answering any questions and helping the process run smoothly.
Join The Goodegg Investor Club For Real Estate Investing Made Simple
Are you interested in the benefits of land investment or other types of real estate investing? At Goodegg Investments, our goal is to make it easy for accredited investors to invest passively in real estate syndications (group investments).
While the majority of our syndications are focused on value-add multifamily, we have launched multiple Goodegg Diversification Funds to help investors diversify into assets like land. If you’re ready to start your investing journey, we invite you to join the Goodegg Investor Club today!