When people think of real estate investment, typically, two types come to mind: commercial and residential. However, there’s a third option and a fourth and a fifth and probably a dozen more when you consider purchasing land as opposed to buildings.
People focus on the buildings that sit on the land, which are valuable rental properties but aren’t the only way to earn a profit off of real estate investment.
Investors can also make profit by leasing land to:
- Energy companies
Many investors consider putting solar panels on the roof of their properties to generate energy for their properties. However, not many consider mass-producing energy on their land with solar or wind farms.
The ideal place for a solar farm is sunny, flat, large and away from highly populated places. A good place to look is in the desert, where land is cheap because not many people want to live in the heat.
By the same token, the wind blows strongly at night in the desert as well. Therefore, the energy farm could produce around the clock. The most efficient wind turbines can power as many as 600 U.S. homes.
The best properties for wind farming are flat with no trees around to block the wind. Keep in mind, these turbines make a lot of noise, so you may want to stay away from populated areas where neighbors will complain.
You can either lease the land to energy companies or you can farm the energy yourself and, then, sell it. However, if you aim to farm it yourself, there will be considerable startup costs.
Solar farmers earn about $21,250 and $42,500 per acre yearly, according to the Market Minute blog. Typically, solar installations require a minimum of four acres of land.
Forty percent of farmland is rented or leased, according to Land Century. That means, that there are are many investors already working on renting farmland to farmers.
How much you’ll make from the land varies depending on where the land you own is located, but this is one of the few investments that doesn’t require maintenance on your part. The farmer (your tenant) takes care of that part.
There is very little access to public access hunting land in the United States. That’s why, according to U.S. Fish and Wildlife, hunting leases reached $625 million in the year 2000.
You create a hunting lease agreement with hunters in order to allow them to hunt on your land on a monthly, seasonal or yearly basis. Landowners can either lease by the acre or by the number of people hunting.
This type of lease only works if you have plenty of hunting game on your property. If you have a variety of breeds that are active during different seasons, even better.
Additionally, if you’ve got specific breeds available, you’ll be able to earn more money per acre or per hunter.
The greatest part of this type of lease is that they require virtually no maintenance on the landlord’s part. The main work that goes into this type of lease is marketing and, with any luck, you’ll have earned consistent and loyal clients.
Trees are a stable investment because they take so long to grow. They consistently grow whether the market is up or down. They’re a long-term play, so if you hold them until the market peaks.
Trees only become more valuable as they grow because they yield more timber. Specialty trees, like Christmas trees, sell well regardless of how the economy is doing.
In addition to profiting off of the sale of the timber, investors profit off the appreciation of the land. People are using these tree farms to transfer wealth from one generation to another, according to CNN.
Lastly, while you won’t make an immediate profit by planting trees, you will over time. And in the meantime, many people profit off of hunting leases, as mentioned earlier.
Other Investment Opportunities
These aren’t the only land investment opportunities, but they are very common options.
Which options have you considered?