Why We Believe Everyone Should Be Investing in Land Right Now!

Are you looking to make an investment that's virtually guaranteed to increase in value regardless of whether it is short or long term? Then buy land!

What's the big deal about buying land? Well, the short answer is that land is about the best investment you can make right now. Forget the stock market, CDs, venture capitalism, and even other real estate, such as houses. If you want to make an investment that will not only be safe, but also profitable in both the short and long-term, then buy land.

Why land, you ask? The main reason is because it's valuable. More specifically, its value is only going to increase. And it's going to increase indefinitely thanks to the fact that land is a limited asset. As the population continues to grow and move, more and more land is being developed, and thus the remaining undeveloped land increases in value as it becomes rarer. Timber, farm land, even industrial or residentially zone land.it doesn't matter! Every type of land for sale is expected to increase in value.

The benefits received when you buy land are many. In addition to the existing and increasing value of the land, you may also have opportunities to profit from the land prior to reselling it. You may be able to lease farm land, pasture, or timber, or enroll your land in a long-term government program like the Conservation Reserve Program (or CRP) which pays a set yearly sum to land owners that choose not to farm certain sects of tillable land.

Regardless of why you buy land of any type, it's a nearly fool-proof investment. Not only are you acquiring an asset that is virtually guaranteed to increase in value (on average land prices have doubled every decade), but the purchase of land also equates to increased collateral for larger future investments. In fact, in the current economy many banks are more willing to make loans based on land as equity than they are to make loans on home equity.

And speaking of the current economy; there is no better time than now to buy land. While land for sale is somewhat limited, the number of potential purchasers is for the first time in a long time limited too. If you happen to have the capital necessary to invest in land, then you are in luck, because for once the competition for land is reduced as regular investors struggle to make ends meet in the current economy. That means that land prices are also more reasonable than they have been in a long time. This gives you an even greater opportunity to profit from purchasing land for sale by reducing your initial investment. Regardless of how quickly the economy rebounds, land will continue to increase in value as the available amount of it decreases. With reasons like these, perhaps the better question is not, "Why buy land," but "Why buy anything but land?

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Investing in Vacant Land

Though most people purchase undeveloped land with the intention of building their dream home, there are other motivations for buying vacant land. This land is also a wise investment for developers, subdividers, or land speculators. Investing in land does require some research, or you could end up paying way too much for land that is essentially worthless. Despite the current state of the real estate market, many undeveloped properties are currently undervalued, especially when you consider easy methods to make a fast profit, such as subdividing a larger property.

If you've found a plot of vacant land you think you want to purchase, where do you start? Don't just purchase the land based on what you think it is. It is essential to actually visit the land and walk around to see what it's like. Don't just rely on a map, or worse yet, the seller's description. For example, you may find that there are no roads to access your land. Clearly, this will hurt its investment potential. There are many features of the land that simply may not be disclosed on a simple map or the seller's description of the land, but are readily apparent upon setting foot on the property.

Before buying any land, whether vacant or developed, you must have a land surveyor conduct a survey of it. Depending on the type of survey deemed appropriate for your situation, the survey can include boundaries, slope and layout, natural features, roads and utilities, and other features that will affect the value of the land.

In some ways, buying undeveloped land is an entirely different process than buying a property with a house already on it. Remember, when buying vacant land there is no proof that a house ever could be built on it. It's up to you to do your due diligence in determining whether the land will meet your needs. Before investing in vacant land, find out four key features of the land. First, how is the lay of the land? Avoid properties in flood zones or with sharp hills, rough terrain, or other undesirable features that may make developing the land difficult. Also, avoid oddly-shaped lots in favor of rectangular or square ones, which will be easier to sell. Second, how accessible is it? Are there roads, and are they well maintained? Are they paved? Third, is there a source for utilities, including water, electricity, and wastewater? Without these essential features, you'll be hard pressed to find a buyer who wants to build there. Finally, how is the location of the property. Will it make a good residential location? Do current projections show the area to be growing? Is it an up-and-coming area where real estate is likely to appreciate in the coming years?

Before buying vacant land as an investment, know what you're going to do with it. You could build a home or another structure, and then sell the property as developed land. You could have the land re-surveyed and subdivided into several smaller properties, which can then be sold to individual buyers. Finally, you can hold on to the land as an investment for a few years until its value has increased. If you have a specific plan in mind, check zoning regulations and other rules to be sure that your plan is possible on the site you have selected. For example, you may be unable to subdivide the land you have purchased, or zoning regulations may prohibit the type of building you have in mind for the property.

We at Point to Point Land Surveyors pride ourselves on accuracy, customer service and quality work delivered on time, guaranteed. Commercial land surveys are a specialty.

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Investing in Land - Assuring a Profit

Everywhere you look someone is saying or writing that land is protected from a declining economy and that it is easy to become a developer, that tax benefits are afforded to land owners and you can't lose money in land. Nothing could be further from the truth. More money is lost in land than other type of real estate investment. Land is raw material that developers use to make building sites, farmers use to grow crops, and people use for recreation. Seldom will raw land pay for itself. In order for land to have any value other than holding the earth together is demand. The lowest level of land use is recreational. Agricultural applications produce very low returns to investors. The highest and best uses include improving the land with building improvements that have a demand for end users or tenants. In today's raw land environment developers (generally) are not buying land to develop, farmers have limited lending resources and are waiting for prices to drop before buying to assure a reasonable return on investment and labor.

In order to experience any level of success in purchasing land it will be necessary to understand what it means to leverage and how to be patient. Leverage in essence means that the less you put down at the time of purchase means the greater percentage return on cash invested when the property sells. The only problem is that with leverage comes high monthly payments with relatively no to low income on the investment. Every dollar spent in holding the investment drives the ultimate rate of return down. If you are leveraging then every day you own the investment you are losing investment return. If you purchase land with $1000 down and sell it a day later for simply $1000 more than you paid for it the return is 100% on cash invested. In an up market the dynamic changes and profits are possible because of the demand curve. Holding land in an upswing market can be profitable but still requires care in setting the purchase up correctly. Land is a complicated investment and be careful of anyone who tells you different. Developing land is even more complicated with banks becoming involved, city and county planners, neighbors, buyers, real estate markets, and time. Time can kill almost any project. You buy land today in a thriving market and it is entirely possible that by the time you have finished the development the real estate market has dried up, just like the 2006 market leaving thousands of unpurchased lots in the market.

A philosopher once wrote, "Patience is a virtue" and in land buying patience is truly a virtue that will assist in making the right buy. A veteran land buyer will wait it out and when the time is right will make offer that assures low risk and an opportunity to make a profit. Land buying should be all about self preservation. What land sold for yesterday has nothing to do with what you should pay for land today. What you pay should have a profit built into it, period. Have a well researched plan, a profit motive and strong finances. Land is illiquid and not suited for a quick flip. If you are considering land as an investment hire a specialist with expertise in land dealings, do your research, give yourself plenty of time to perform your due diligence and choose the investment well.

Douglas Ferguson has been a successful land broker for over 17 years in California and Idaho and at present is a Designated Broker with Ferguson, Beal & Associates in Middleton, Idaho. Mr. Ferguson is an Accredited Land Consultant and a Certified Land Consultant.

Currently, Mr. Ferguson serves as President of the American Land Institute, Member of the World Organization Land Federation and teaches continuing education in matters of land brokerage. http://www.douglasferguson.net

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