Investing in land is one of the most powerful strategies to make money in 2023. Over the past few years, demand for land as an investment has experienced an uptick. From 2020 to 2021, there has been an increase of 155% in rural land sales. This growth is due to the stability that comes with purchasing a piece of land.
There are many benefits of land investment, especially avoiding many of the complications that can come with other forms of investment.
If the concept of investing in land is new to you, take a tour through this article to discover the exciting world of land investment and the different types of land available. And learn which one of them would be the best investment for you in 2023.
Benefits of Investing in a Land
Before we begin to explore the types of lucrative land investments, let’s learn about the many benefits of investing in raw land.
Limited Supply: Land as a commodity is finite, you can’t produce more of it. And since there is a limited amount of developable land available to invest in, the price of land will only continue to rise. Therefore, if you hold a land investment, you will see great returns in the future.
No Hassle or Upkeep: No construction! No refurnishing! No repairs! No maintenance! And no hassle with tenants! Owning a land as an investment does not come with any of these normal issues. Once you purchase it, sit back, relax and watch your investment grow.
Less Competition: Most real estate investors opt for houses, apartments, and other developed properties. As a result, there is often major competition in this segment of real estate investment. Alternatively, the world of raw land investment has less competition. You can purchase a piece of raw land at a very affordable price, making the initial investment inexpensive.
In addition, owning raw land provides you the flexibility to either develop or resell it for a higher price.
Type of Land Investments to Look Forward to
#1. Farm Land: With the agricultural market increasing, investing in farmland has emerged as a profitable opportunity. Per statistics, farms have an average of 11.5% yearly return. Plus, having your money locked in farmland investment will settle out your risks and will generate a passive income source.
So, now is the right time to capitalize on the return from farmland investments. You can invest in farms for both crops and livestock, either directly or via farming-related companies.
#2. Subdivision Development: This involves purchasing a large piece of land and then subdividing it for the purpose of building multiple houses. Subdivision development is an effective strategy to add value to your land. More parcels of land mean more profit. When you divide land into smaller pieces, you can sell it to different buyers and keep some for yourself.
Additionally, finding buyers for small divisions of land is much easier as compared to finding buyers for a large developed property. However, when selecting this land, ensure city services are extendable to the area at competitive prices.
#3. Commercial Development: Another great land investment option is to convert raw land into a warehouse, storage facility, factory, mechanic shop, or shopping complex. Likewise, you can develop your raw land into an array of things to generate multiple sources of income. However, make sure to gauge the potential of commercial land based on your preferred development work.
Accessibility, location, and necessities available on or near land are some of the many factors that you must consider.
For instance, if you are likely to open a shopping space, then road access to shoppers living in proximity would be of prime importance.
#4. Recreation: Using raw land for recreational purposes comes with a range of both personal and financial benefits. It is an affordably priced long-term investment. When you invest in recreational land, you get the opportunity to earn income as well as use the land for entertainment purposes.
This way you optimize land usage, make money and hold the land to benefit from appreciation in value. There are several ways you can use recreational land. You can develop it into a weekend getaway spot, your new favorite fishing location, a community garden, outdoor family retreat, even a place for camping, hiking, riding ATVs, and much more.
Best Places to Invest in Real Estate
Now that you are familiar with all the different types of land, its time we go over location. A few places are worth considering due to their anticipated price hike. Here are some recommended best places to find affordable land for sale in the USA in 2023. The places listed are based on analyzed trends from across the US.
- New York
Ways to Earn Profit from a Land Investment
If you have made up your mind to invest in raw land but still don’t have a concrete plan in place, here are a few ways you earn profit from your land investment.
Buy and Hold: This is a long-term strategy and is likely to be more profitable than other real estate investments.
As the price of raw land has the potential to increase in the coming years, buying and holding it until the areas surrounding your land develop can earn you attractive returns. You can purchase the land and hold it for years until it offers you viable returns.
Lease to a Farmer: Another effective way to maximize your returns on raw land is to lease it out.
If you are fortunate to get a good deal on a piece of farmland, go for it without a second thought. Historically, farmlands have yielded better returns than bonds, stocks, mutual funds, and other types of investments.
Furthermore, statistics say that the capital value of farmlands has risen by 4.6%. And when taking income generated from lease into account the average annual returns amass to 11.8%. That’s quite a lucrative return.
So, by leasing the land you are possibly going to get a good return, which will even help you cover up your tax and insurance costs.
Lease to a business: Many businesses look for raw land to conduct their business operations. They lease the land for a long duration and pay you the rental amount on a monthly or yearly basis. Several types of businesses might be looking for land, these may include pet sitting, animal breeding, or ones needing huge storage lots.
Apart from this, you can also lease your raw land for other purposes. These include billboards, ranchers, and cell tower installation. Lease is a pretty good and straightforward way to make a regular income with your raw land.
Buy Low, Sell High: As cities grow, the raw land emerges to be one of the strongest real estate investment avenues. If you can purchase land at a lower price during market lows and then sell it later when the price spikes, you can generate a substantial profit.
Additionally, you can also develop your raw land into something more to increase its value and utility. You can use the same piece of land to develop multiple entities to increase your income sources.
The options covered above are the most popular types of land investments, but they are not the only ones.
There are many options out there that can offer you profitable returns. However, regardless of the type of land investment you choose, it is recommended you do your research before making a decision. Alternatively, you can find a trusted real estate agent to help guide you in the right direction.
Remember, buying land is not an overnight money-making scheme. Instead, it requires a robust strategy, research, and investment to gain profitable long-term results.
How to Evaluate a Potential Land Investment?
There is number of factors that you must assess to ensure utilization of your land to its full potential, these include:
- Location of land.
- Size of land.
- Utilities available.
- Access to neighboring areas.
- Zoning laws of the area.
- Safety hazards and precautions available.
- Soil quality, composition, and vegetation supported.
What Improvement Can Be Made to the Land?
If necessary, you can consider fencing your land. And if interested, you can have different developments, such as build a yoga studio, plant an herb garden, build a warehouse, open an event center or much more.
Is There Any Specific Time Limit to Performing Construction on Land?
The land is a hands-off investment. There is neither a time limit for construction nor any specific maintenance required. You can prefer to keep your property vacant as long as you desire.