One thing we are certain of is that no one is creating more land; the current available land is all there will be in the future. Consider this carefully, not many other assets or investments have this trait. Here are 5 reasons why you should consider purchasing land.
Recent update: This article, dated May 22nd, 2019, advised readers to consider purchasing land. If you had followed this advice and invested in land, by now in 2024, you would have seen a significant increase in its value due to inflation and the impact of the COVID-19 pandemic. In some instances, the value has multiplied by 30 times or more. Land that was originally sold for $2,000 to $5,000 is now being listed for over $30,000. Various factors, such as inflation, global currency instability, the strength of the dollar, the appeal of alternative assets, and concerns about urban crises like the COVID-19 pandemic, have fueled a surge in demand for land. At times, we struggled to keep up with sales and frequently sold out of available land.
Is it Still a Wise Choice to be buying Land? We think so, here are 5 reasons you should be buying land
1. A Hands Off Passive Investment
One of the most appealing aspects of investing in vacant land, when it comes to real estate, is the simplicity and ease of ownership it offers. Unlike owning a building, which comes with a myriad of potential issues such as maintenance, repairs, and tenant management, vacant land requires minimal upkeep and management if any.
With vacant land, you are spared from the headaches of dealing with common property problems like plumbing issues, structural damage, and pest infestations. This means you can enjoy peace of mind knowing that your investment will not be plagued by unexpected and costly maintenance expenses.
Additionally, vacant land provides a sense of stability and predictability, as the land itself remains unchanged regardless of market fluctuations or economic conditions. This makes it a low-maintenance and hassle-free investment option for those looking to diversify their portfolio without the stress and complexities associated with owning a building. It's a great alternative to homes when it comes to real estate investing.
2. Untapped Potential of Land for Significant Gains
Land is interesting, same goes for real estate like homes but it is quite different. If you buy in an area that is expected to boom or even a home. Chances are, over the next few years that area will be going up in price. However, the difference between land and a house is the cost you paid and the amount you put into it. With a home, you may have to buy for a lot of money and fix it up, sometimes upwards of $30k. Which can actually come straight from your savings. With land, you can usually get quite a good deal if you pick it before a boom. Also, you are putting nothing into it other than some property taxes which are assessed quite low. Even as much as $10.00 annually. So it cost nothing to hold, goes up in value and sells much higher.
3. Resilience from Market Volatility
During real estate downturns, the impact on land tends to be less severe when compared to housing properties. Land is often seen as a more stable asset because it retains its intrinsic value regardless of market conditions. While the housing market may experience significant fluctuations and depreciation in value, land generally maintains its worth over time.
One of the reasons for this difference in impact is the fact that land does not require the same level of upkeep and maintenance as buildings or homes. When the housing market is unstable, property owners may struggle to cover the costs of maintaining their homes, especially during extended periods of market downturn. In contrast, landowners do not face the same pressure to maintain their properties, as land itself does not deteriorate in the same way that buildings do.
Moreover, issues such as mortgage loan defaults tend to affect housing properties more than land. During economic downturns, homeowners may find themselves unable to meet their mortgage obligations, leading to foreclosures and a flood of distressed properties in the housing market. This oversupply can further drive down housing prices and exacerbate the impact of the downturn.
4. Potential to Live Mortgage-Free
If you are not wealthy, you may require a bank loan and incur mortgage debt when purchasing a home. However, by employing a suitable strategy, you could acquire land for less than $20k, then construct an alternative home for around $30k or opt for an RV at a similar cost. Subsequently, your sole expense for the property would be an annual tax bill. You might assume that this would result in substandard living conditions. This is not the case, as some highly imaginative individuals have purchased inexpensive land, constructed Aircrete dome homes, and rented them out on Airbnb.
By following the right approach, you can create a residence or appealing Airbnb for less than $10k. Some individuals use aircrete, while others utilize Airstream trailers. By enhancing the landscaping in these setups, you can potentially earn over $100.00 on Airbnb. Refer to our article for a detailed explanation of how this can be achieved.
5. Equity with Land Ownership
Imagine if you own land that appreciates significantly in value because the city begins to develop around it. A prime example is the situation in Las Vegas, where some people initially considered the desert land worthless, while others recognized its potential. Those who held onto those $10,000 parcels located far from Las Vegas now find themselves surrounded by a thriving community, with vacant lots becoming scarce commodities. What was once worth around $10,000 two decades ago is now valued at over $300,000. At this stage, there is tangible equity in the property, enabling you to secure a loan for construction purposes. Although this loan may carry a higher interest rate, it can later be converted into a mortgage loan post-construction. By following this path and seeing the value appreciation, your initial land purchase could become your first rental property, providing additional income from a newly built home that can also fetch a higher selling price.
In fact, we only briefly touched upon the numerous ways in which land can be beneficial in an investment portfolio. A forthcoming article will delve into the influence of political and financial events on land values. Nonetheless, this overview provides a glimpse of some of the key advantages.
