Top 10 Reasons Why You Should Be Investing in Land Today

Investing in land does provide solid returns. There is this stigma that land isn’t able to turn a solid return for an investor. But this is simply a rumor or a thing of fallacy from investors that either made very unwise choices when buying their land, or are trying to pit land’s ROI with stocks, such as Jack in the Box, which rose 258% in the last five years.

When investing in land, I see a long-term investment that is fruitful.

Sometimes, the return on land can be massive, and other times, it’s modest. But the one thing I love about land is that it’s mine. If you own land and pay your taxes, no one can take it away. Your land can’t go bankrupt like a Fortune 500 company can, and land is tangible – you can touch it.

The top 10 reasons why you should be investing in land today (and I don’t suggest a 100% portfolio of land) are:

1. Land is an Investment That Requires a Hands-Off Approach

If you own vacant land (outside of city centers where restrictions may be in place), it’s a hands-off investment. You never need to try collecting rent from land, cleaning toilets or worrying about a leaking roof. Raw land – void of any buildings – is as hands-off of an investment as possible.

2. Vacant Land is Sold by Motivated Sellers

There is often less emotional attachment to vacant land than there is with an owner that lives on the land and has a hard time leaving all of the memories behind. Vacant land doesn’t have the same attachment as a home that the owner’s great-grandfather built by hand.

And when you’re ready to invest, vacant land owners are ready to listen to your offer.

3. Land Has Less Competition

Anyone can buy land, but there is far less competition than trying to land a stock or other investment that other people are vying over. And since real estate investors tend to sway towards apartments and homes that they can rent, you’ll be stuck in fewer bidding wars and will be able to negotiate on price.

4. Vacant Land Has a Lower Upfront Cost

Vacant land almost always sells for much less than land that has a dwelling on it. And it’s true: land is often purchased with cash. But when you buy in cash, you call all of the shots. You don’t need to deal with banks or lenders that have stringent criteria. A small upfront cost is all that’s needed to invest in land.

5. You Can Buy and Sell Land You’ve Never Seen in Person

You don’t visit a stock or a bond, and you don’t need to visit your land either. If you have experience with researching properties, you can literally buy or sell them without every seeing the property in person. Many investors will buy and sell a property without stepping foot on the land.

All it takes is a few calls to local agencies to ensure the land isn’t in a swamp area and a few glances on Google Maps to get an idea of the land. Many sellers have never seen the property they own in person.

6. Sellers Are Often Willing to Finance

Maybe you don’t have any upfront capital. And since banks often have very stringent lending criteria for land (unless there is a structure on it), you’ll find that getting capital to invest the traditional way is difficult. Sellers of vacant land are often willing to provide financing to buyers.

When choosing seller financing, you’ll often get better rates, you won’t have to pay upfront costs (or as much upfront costs at least), and the property will gain in value as your financing continues.

7. Seller Financing Can Provide a Steady Income Stream

Your portfolio has grown too big and its time to offload a few properties – no problem. If you offer seller financing, you can enjoy multiple streams of income monthly from selling properties. It’s a great way to get a return on your investment that pays you in the process.

8. Land Has Low Maintenance Costs

If you own just land, you have very low maintenance costs. You will not pay high electric or water bills, and you won’t have to worry about mortgage payments looming over your head. The only thing you need to worry about is paying your property taxes.

9. Land is Limited

Sure, land prices can fluctuate, but they fluctuate far less often than the stock market, commodities and currency. The great thing about land is that there is only so much of it on the planet. And as a limited resource, the value goes up and up as there is less of the resource available.

Think of oil prices (before the recent oil glut). When oil production was lower and demand was high, oil prices skyrocketed. Land can’t be overproduced because they’re not making any more of it. Land is limited in quantity, and as areas begin to become more populated, your parcel’s value will go up and up.

10. Land Can Produce Income (With Some Work)

There’s a reason the mega-rich buy thousands of acres of land. Kings and queens had more land than they knew what to do with, and many of the castles still standing and operational today are able to persist because of the land they’re on.

When you have land, you can make money in a variety of different ways. People need food – that will never change. One of the sure-fire ways to make money off of land is to farm it. If you don’t want to be a farmer (it’s hard work), you can:

* Lease the land

* Use the land for timber

* Rent the land to farmers

* Pay someone to farm the land

* Build on the land and rent the buildings

You can generate income from land if you’re willing to put up more capital to get operations started. If you just want to lease the land as-is, that can also be done. Many people lease land for crop growing, grazing, timber growing and even hunting.

If you’re not investing in land today, your portfolio is missing a long-term investment that can provide substantial profit yields in the future.