Why Land Is the Best Long Term Real Estate Investment

Why Land Is the Best Long Term Real Estate Investment

Why Land Is the Best Long Term Real Estate Investment
When it comes to real estate investing, most people are more concerned with the physical structures on the property rather than the land itself. Homes and commercial buildings can be good investments, but land is the best long term real estate investment you can make. Purchasing land in the right location and for the right price can provide you with a fantastic return in as little as ten years. Here are just a few of the many reasons why land is such a great long-term investment.

Land Appreciates in Value

Land appreciates in value each year because of supply and demand. Mark Twain once said, “Buy land. They’re not making it anymore,” and his advice is spot on. We cannot make more land, and supplies are limited. As the population continues to grow, the value of land will only continue to rise.

Homebuyers and investors are often under the impression that it’s their home that appreciates in value when in actuality, the physical structure will depreciate in time. It’s the location and the size of the land that really determines how valuable a piece of property is.

Investing in land in urban or growing areas will likely appreciate faster simply because it’s in higher demand. Let’s take a look at a few examples of how quickly land has appreciated between 1990 and 2014 in some of the biggest cities in the U.S.

  • New York: 223.86%

  • Los Angeles: 132.86%

  • Austin: 174.60%

In nearly 25 years, investors would see a tremendous return on their investment. Investing in land may be long-term, but it’s a reliable investment that will continue to increase in value each year.

Land is a Tangible Investment

Unlike other forms of investments, like stocks, bonds and commodities, land plots are tangible. Land is not only tangible, it’s essential. Whether used for farming, residential, commercial or recreational purposes, land is a vital part of society. Farm land, in particular, is a tangible investment that not only appreciates each year, but generates income as well.

Land is a long-term asset that will not depreciate or wear out over time. Aside from any physical structures on the property, nothing can be destroyed, stolen or broken. The land that you purchase will never have a value of zero simply because land is in limited supply and in such high demand.

Land is Inexpensive to Purchase and Own

As a long-term investment, land is very inexpensive to own. If you purchase land with cash, you can find great deals. Even if you need to finance your purchase, prices for land are typically cheap. Most sellers are highly motivated and sales are often quick.

There’s no need to worry about mortgage payments or utility bills. Property taxes are generally cheap, and the cost of property insurance is negligible.

Land is a Hands-Off Investment

Unlike other real estate investments, land is completely hands-off. There are no tenants to deal with, leaking roofs, pipes bursting or any of the other issues that come along with investing in a home or commercial building. You can forget about construction or renovations.

Depending on what type of land you invest in, your only obligation may be lawn care. While farm land may be a bit more complicated to maintain, recreational or vacant land is almost completely hands-off. The only concern you may have when purchasing land is whether or not it is buildable. If and when you decide to sell your land, the new owners can then choose to build on the land if they want to.

Land Can Produce Income

Vacant land may not produce any income on its own, but it may have the potential to produce income. You may invest in farm land, or you may choose to sell grazing rights to generate a cash flow. In the future, you may choose to develop the land and build a home, an apartment complex or a commercial building. Land can produce income in several ways if you’re willing and motivated to put in the time and effort.

Land is a hands-free investment that’s inexpensive to purchase and maintain. Plots of land are in limited supply, and we can’t make any more of it. If you choose to invest in land that’s in the path of growth, you can see a great return on your long-term investment.

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