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Why Owning Land is a Good Investment

Why Owning Land is a Good Investment

In an era where markets are notoriously volatile and financial instruments of all kinds always come with an inherent level of risk, the notion of 'safe' investments has become something of a myth for many. Real estate has long held a place of appeal for those seeking more secure means of growing their wealth, and within this market, land as an investment is often overlooked and undervalued.


LandGate provides potential land investors with an easy way to search for different types of land listings. Whether they are interested in buying vacant land, purchasing land with agricultural potential, or buying raw land that has the potential to provide them with passive income. Land is a tangible, potential long-term investment that provides the opportunity with generational wealth. 




Benefits of Investing in Land

Unlike structures, land doesn't depreciate over time. It holds a timeless value that transcends generations. The oft-cited mantra of "buy low, sell high" resonates powerfully with land as an investment. Its enduring nature offers stability and potential for significant returns in the long run. While the real estate market can be volatile, land stands as a solid asset that generally appreciates over time.


This upward trend in land value is underpinned by the relentless growth of the global population and the consequent rise in demand for space. As the world becomes increasingly crowded, land emerges as a finite resource with perpetual demand. The scarcity of land, particularly in sought-after or strategic locations, underscores its intrinsic value. The adage that "they're not making any more of it" holds true, emphasizing the irreplaceable nature of land.


Raw land investing remains a fixed commodity in a landscape where construction and urban development continue to reshape skylines, its limited supply fuels its value, especially as populations expand and urban areas require more space for residential, commercial, and agricultural purposes. This unyielding demand positions land as a prime investment choice for those looking to capitalize on its appreciating value.


Diversification is a cornerstone of prudent investing. Investors can mitigate risk and optimize returns by incorporating land into a diversified portfolio that may already include stocks, bonds, and other real estate assets. Land investments often exhibit a low correlation with traditional financial markets, offering a valuable hedge against economic uncertainties and market fluctuations.


As the epitome of a tangible asset, land provides a sense of security and permanence. Its physical presence, devoid of the maintenance costs associated with structures, offers investors a tangible and enduring investment avenue. Moreover, land ownership typically entails lower taxes and minimal upkeep expenses compared to other real estate assets, making it an attractive proposition for investors seeking stable returns with reduced day-to-day involvement.


Factors Influencing Investing in Land Value

Location

In real estate, location is king, and nowhere is this truer than with land investment. Proximity to urban hubs, scenic natural features, and available amenities all play a significant role in determining the value of land. Strategic positioning within high-growth areas or regions with expected development can skyrocket the worth of a parcel of land.


Zoning and Potential Usage

The existing or prospective zoning of a piece of land dictates how it can be used. Depending on the area, land can be zoned for residential, commercial, agricultural, or mixed-use purposes. Changes in zoning laws or the creation of new infrastructure can transform the value proposition of any plot of land, making it essential for investors to stay informed about local regulatory changes.


For potential renewable energy development, land is required to fit certain criteria involving electrical infrastructure, topography, and potential state government incentives.  For both residential and commercial use, infrastructure development such as roads, utilities, and public transportation can boost the attractiveness of land for investors. The potential usage of a plot of land is instrumental in determining its long-term value.


Infrastructure Development

The development or planned expansion of infrastructure, such as roads, utilities, or public services, can significantly boost the value of land. Not only do such projects make land more accessible and attractive for development, but they often signal a broader commitment to growth and can instigate other commercial and residential ventures in the vicinity.


Environmental Considerations

The condition of the land in terms of its environmental health and the potential for either natural or man-made disasters can both enhance or detract from its value. Environmental studies and reports can reveal challenges or opportunities that factor into the investment decision. For instance, waterfront land may face issues related to rising sea levels, but it also commands premiums due to its scarcity and appeal.


Tips for Successful Land Investments

  • Conducting Due Diligence: Before you sign on the dotted line, it's imperative to conduct thorough due diligence. This means ensuring your land survey, title report, and environmental assessments are thoroughly reviewed. Understand what you're buying, the potential uses permitted by zoning, and any encumbrances on the land that may surprise you down the road.

  • Understanding Local Market Trends: Real estate is deeply local, and land markets are no exception. Stay abreast of local economic conditions, political developments, and industry projections that could affect the demand for land in a particular area. Networking with local real estate professionals and government officials can provide invaluable insights.

  • Working with Professionals: A seasoned real estate attorney, a reputable land surveyor, and a knowledgeable real estate agent can be your best allies in navigating the complexities of a land purchase. Their advice and experience can help you make informed decisions and protect your interests.

  • Long-term Vision: Patience is a virtue in land investment. While you may see quick turnarounds on some investments, the true value of land often emerges over years, if not decades. Have a clear vision of your investment goals and be prepared to wait for the right opportunities.


Interested in Learning More About Land?

In a dynamic investment landscape, land stands out as a solid and often overlooked asset class. By recognizing the myriad advantages of land investment, and by wisely considering factors such as location, potential zoning changes, and local market trends, investors can capitalize on the unique value that land provides.


Whether it's for potential future development, the preservation of wealth, or simply as a part of a well-rounded investment strategy, land ownership can be a powerful tool for building and protecting your financial security. With prudent, informed decision-making and a long-term approach, investing in land can yield significant returns and provide a foundation for a resilient and prosperous portfolio.


LandGate’s LandApp tool provides subscribers with exclusive parcel data surrounding different value and risk indexes that help identify prime land investment opportunities. Gain access to risk indexes like oil & gas contamination, drought, flood, electricity blackout, and more! For only $10/month, subscribers have all parcel data across the United States at their fingertips.




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