It’s safe to say, just about everyone knows owning real estate can build some serious wealth. The majority of people, first and foremost, think of home ownership and rentals first. But what about raw land?
Should you be Investing in Raw Land?
If you consider tax benefits, appreciation, government programs like CRP, income from hunting and farming leases or the value to have a place where you could build that dream home from scratch. Purchasing land is a solid investment vehicle.
There are many reasons why you should add land to your own investment portfolio and these include the following:
Yes, land can actually bring in some income while avoiding large property taxes, mortgage and maintenance. Yearly income from hunting leases, farming leases, cell towers, government conservation programs and pasture rentals provide landowners with the potential for multiple income streams on the rural properties. Well-managed and well-thought out tract of land, that has the ability to rent or lease, can bring in major income. This is because owning land can be very cheap to own. In other words, a revenue stream without cost to you, that may give you a good yearly return. Also, given some people just don’t plan on using the land, you can find cheap land for sale to invest in.
Have you ever seen a parcel of land in a beautiful high traffic area just sitting there undeveloped? Chances are it was bought years ago for pennies on the dollar. Only now to be in high demand and worth millions in some cases. This is because demand and supply are primary components of appreciation. When it comes to land, you can’t make more of it and since the population continues to grow, the land’s value increases. Also, In rural setting where crops are made on the land, demand is higher since the growing population needs more foods to be produced. A good large acreage of land with good soil is gold for some producers. For the reason that land is a finite commodity, the demand for land will be always increasing.
- Family Values
Now why would land have anything to do with family values. Well it’s probably going to be where you and your family will live. Picking out a land where you can garden, build a shed, a chicken coop and of course a home you design, brings the family together. Also if you pass down this home, it’s quite a legacy that you built it or designed it, generations to come. It is very easy today to get caught up in extracurricular activities like work, television, video games, and everything that distracts you from spending time with the ones that you need to spend time with. So even a vacation home in a rural area may be just the spot to put up a cabin and get back into nature.
- Stocks VS Land
Diversify!! I think we have all heard this term. Putting all your wealth into stocks and the one home you own is very common. But that is like betting on two horses out of ten to win. The last thing you would ever want to happen is for those two to crash, but it has happened historically. With land, being inflation resistant, you are adding an additional strategy to your portfolio. Statistically speaking, land in the right area has actually done better then most 401k portfolios when measured long term. So you may want to think about adding on some raw land.
- Low Cost and Maintenance
Holding land can almost cost you nothing depending on the land. It really depends on the county and how they are assessing your land value for property taxes. Some land over 1 acre can have property taxes of $5 annually. That would $100.00 to hold it in the family for 20 years. With zero other costs!! Now, if your land is very expensive and in a very prime location then it will be worth more but also cost more in property taxes. But raw land is assessed differently than land with a home. So either way, it’s much cheaper to hold long term. Also, without any home you won’t have a utility bill or maintenance to do on anything. Just pay the property taxes and wait for it to appreciate.
Hopefully this helps you think about raw land, because it’s not always on the radar for most investors. But it’s a great strategy to add in on your investment portfolio. It also doesn’t have to be some $100k plus purchase. There are land companies out there who are selling lots in Hawaii, Texas, Missouri and more. Some even lake side or in beautiful rain forest areas, all for under $10k. Yes, that’s right, it’s possible for anyone. Also if you don’t have $10k on hand, not a problem. Companies like LandZero offer financing options, allowing you to make monthly payments with very low interest rates. So go take a look and see what you can find out there, overtime I think you will be happy you invested in land.