Colorado Land for sale review Buying land is an often overlooked form of real estate investment that can produce good returns. Land is a fairly hands-off investment but generating returns is more involved than with rental property. This is because to buy land thereâs more research, evaluation, and firm profit strategy needed. Here are 4 stages to buying land and successfully profiting from it: Step 1. Locate Land to Buy Real Estate Agents Land Brokers For Sale By Owner Auction Sites Government Owned Land Step 2. Evaluate the Land Purchase the areas to investigate before you buy a piece of land are: Deed and Ownership History Property Taxes Zoning and Potential Zoning Issues Physical Characteristics of the Parcel Usage Restrictions and Building Requirements Availability of Utilities Property Survey and Plat Maps Step 3. Finance Your Land Purchase Paying Cash Conventional Loan Options Land Loans and Lot Loans Owner Financing Step 4. Profit When You Buy Land Hold Long-Term Improve the Lot Get the Property Rezoned to a Higher Use Lease the Land Flip the Land Purchase The Pros and Cons of Buying Land Land is often overlooked as a potential real estate investment. Yet, there are clear benefits as an investment option. Of course, there are limitations and downsides to be aware of. Pros to Buying Land There are many arguments in favor of investing in undeveloped land. They include supply and demand, the comparatively small price tag of many parcels, and the hands-off nature of land as an investment. Itâs a Limited Resource â both Mark Twain and Will Rogers said in some fashion, âBuy Land, they arenât making any more of it.â Thatâs very true â and points to the simple investment reality that thereâs a fixed supply of land. Land is an Inexpensive entry into investing â for a new investor, a land purchase can be a very inexpensive way to start investing in real estate. There are places in the country where building lots can be purchased for under $1,000. Itâs a Hands-Off Investment â vacant land is basically a passive investment. There are no toilets to fix, no tenants to evict, and no worries over roof damage in a storm. The only inescapable obligation is paying your property taxes. Cons to Buying Land Despite the noted benefits, land investments do have their downsides. Undeveloped land isnât typically a cash generator, and there are costs involved in ownership. Doesnât Produce Immediate Income â unless you are in the position to lease the land to a farmer or develop a mobile home park, your land purchase isnât going to generate current income. Itâs a long-term investment that may take years before producing a return. Does Have Carrying Costs â even though land doesnât typically generate current income, it does have current costs. Property taxes are due either annually or semi-annually. If youâve financed the parcel, youâll have periodic payments. Even if you paid cash, that money is no longer invested elsewhere, and youâve also spent cash on closing costs, surveys and title insurance. Bottom Line Buying land can be a lucrative investment, particularly as a long-term investment strategy. Buying good parcels involves careful research. Land investments are fairly passive, but generating returns often has a long timeline, yet they incur current costs.
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