I have said it for years and I will never stop saying it, vacant land is one of the best real estate investments in the world… and… it is one of the most overlooked and misunderstood as well.
If you tell someone that you are a vacant land investor, perhaps you get a lot of perplexed looks or maybe some blank states. I have spoken at REIA (Real Estate INVESTOR Association) and realize that even among these “educated” people, there are misconceptions in most of their minds as well. Numerous ones make statements about land being a “weak investment” and the 2 main reasons are always the same…
- It just sits there; Nothing happens or can happen with it until you sell it.
- You cannot cash flow land.
Let’s address these…
First, rather than looking at that the fact that land just sits there as a negative, why not realize the vast amount of positive that comes from this fact. If you purchase a house or any real estate structure and leave it alone even for one year, what will it cost to bring it back to the condition you purchased it in? Thousands? Conversely, vacant land is simple. What you have today, you will also have in a year, 5 years, 10 years. Owning the right piece of land, with it’s simplicity and stability, is vastly superior to all the problems that WILL ARRIVE with owning any other type of real estate
Second, (I will not spend a lot of time of this right now), vacant land can cash flow very easily. The bottom line is lenders do not do much in the way of loans on vacant land any longer. If you want to sell a piece you have with time installments, you just created the ability for anyone that can afford the monthly payments to purchase it from you as opposed to only those with cash reserves. And even with this scenario, it is very hands off. There are not buildings to maintain, no crazy tenants to deal with and no pests to kill! Again, as far as I am concerned, it is one of the best investments in the world.
If this is your first time visiting and you have been cynical or even overlooked vacant land as an investment, let’s examine further about land and what it can do for you…
As mentioned, one of the best things about land is you do not need to do anything with it. Do you know how to build? Do you know how to rehab? Do you know how to farm? Do you graze cattle? Do you know how to hunt? There are many other questions like that that could be asked and perhaps the answer to all of them is NO, or perhaps a better question is, Do You Want to Do These Things? Whether the answer is yes or no, land is a great investment for you! While you may have some of the skills listed above, you don’t need to be an expert or know anything about them to invest in vacant land. You really only need to know one thing: “Is the property usable for someone that wants to do these things?” As long as someone else can use the land however they want to, you have overcome the biggest hurdle in land investing. And the best part is, you don’t even need to know these people or what the use is up front. When it’s time to sell, they will find you!
And in the meantime, as already mentioned, land is hands off. Pay the yearly property taxes (which are very cheap in comparison to those on a home and in proportion to the property value) and sick back and forget about it. Do you dread dealing with tenants, toilets, bugs, mold, lawn care, leaking roofs, bursting pipes, broken furnaces, and the plethora of other issues that come with owning structures? Vacant land doesn’t involve ANY of those issues. Once you buy it, NOTHING HAPPENS, and in this case, nothing is a great thing!!
Vacant land offers another amazing convenience that is not true about other real estate. There is no need to ever see the property in person. Now, many large scale real estate investors purchase homes without seeing them but the bottom line is someone does. They have a team in place helping them and really, the only ones using a team and not seeing properties themselves are full time investors that know the ins and outs of the business. With vacant land, a novice, purchasing their first property does not need to physically see it and they do not have to have a team or person in place to see it either. Everything can be done virtually, using the same simple to use websites that are available to everyone for FREE. Remember, with vacant land, there are no structures so the inspection process is next to nothing and I am going to walk you through it right here in the next couple of sentences! A simple call to the county will verify use and access to the property (no even an issue if you can see a road). A few minutes on the internet will show you the market value. Online mapping software will show you what the property looks like… and your research is DONE. No need to ever see it to know you have a sound investment!
We mentioned cynics earlier. The problem most people have is they know what they can get monthly for a rental property. They problem most face is they look at the monthly rent amount rather than the actual NET they receive. For example, say you want to rent a home that is worth $200,000 for $2000 per month. $2000 in your pocket every month sounds great! But do you own that property free and clear or are you buying it to rent it? With a mortgage on that property with 15% down and a 5% interest rate, your payment is almost $1000 per year. On a $200,000 home (in Florida) you are probably looking at another $200 per month each for taxes and insurance. What about repairs and pest control? By the time you are done, $2000 might become $200 in your pocket. And what if you have to go some time without a tenant in place??
On the other hand, land is very inexpensive to own as a long term investment. There are no mortgage payments. There are no utility bills. There is no pest control. There are no repairs. Property insurance is extremely cheap and is optional. Property taxes are very cheap. It is a great place to “park your cash” and let it grow. A property you purchase today for $10,000 could easily be worth $50,000 in a short time. Over that time, you will have paid nominal amounts in property taxes. Many who purchase properties from us have used them and sold them within a matter of a couple of years for large profits. I wrote an article previously about purchasing in an IRA. How about getting all of those profits TAX FREE? It’s possible!! CLICK HERE TO READ ABOUT THIS STRATEGY
Think about everything discussed above. Land is a a long-term, tangible asset that has benefits far and above other real estate.
Land doesn’t wear out!
Land doesn’t depreciate!
Land cannot be broken!
Land cannot be stolen!
Land cannot be destroyed!
When you think about all of these benefits and how cheaply you can buy vacant land, can you really think of a better investment?
To sum it up, remember the words of Mark Twain; “BUY LAND, THEY’RE NOT MAKING IT ANYMORE”.