There are many ways that you can invest in real estate – from residential to commercial to multifamily… and one often overlooked way to invest is a land investment… Are you looking at buying vacant land for investment? If so, keep reading because this post will walk you step-by-step through the reasons that you might consider holding vacant land in your portfolio.
There are many reasons why someone might be interested in buying vacant land for investment…
Reason #1. Land is one of the original investments!
Long before people were flipping houses on network TV, investors were staking their claim on raw, vacant land and building their fortunes on it. All the way back to ancient times, kingdoms were built on the value and opportunity that land presented… even raw and undeveloped land had perceived value. Arizona in particular is great because of the various different types of land that can be had (desert, city, mountain views, treed, etc.)
Reason #2. Land is a scarce commodity
Land is scarce… no one is making any more land (especially in Arizona!) The more people own, the less is available (it’s a simple issue of supply and demand). So by investing in land, you are banking on the land supply to continue dwindling, which tends to cause the value of land to trend upward. While there are no guarantees on any investment appreciation, the historical trends indicate that a lower supply and increase demand push prices higher.
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Reason #3. Multiple exit strategies
One of the most exciting reasons to own land is that you have many options to profit and benefit from the investment. If you invest in a house, your only options are really to rent it or sell it. But with land, there are many more exit strategies. You can build on it, you can subdivide it, you can rent it out to farmers, you can even sit on it and wait for an urban center to come to you. Of course it all depends on where the land is exactly and what the bylaws are, but you do have multiple exit strategies when buying vacant land for investment. One of the easiest ways to profit is to simply fence the land and resell it!
Reason #4. Enjoyment
Another reason to think about buying vacant land for investment is the enjoyment factor. Depending on where your land is, you may be able to enjoy the land for yourself (such as for hunting, fishing, camping or just relaxing) before you make money from it. Of course this may not work in every situation but it is a consideration. With very few restrictions on rural land – the possibilities are endless!
Reason #5. Less work
As far as investments go, a vacant land investment is not very much work at all. In many cases, it’s a “buy and hold” or “set it and forget it” investment so you can buy and then wait. And any upkeep you may have to do is often minimal. Arizona also has some of the lowest taxes in the US. Land with no improvements (vacant land) have some of the lowest property taxes you’ll find anywhere!
When it comes to real estate investing options, buying vacant land for investment is a very compelling investment for many reasons.