My granddad beat this saying into my head from early on in my life. He always told me, “Son, they ain’t making any more land. Get all you can!”
When people think of real estate investments, they associate them with rental properties, commercial properties and/or foreclosures. But people rarely think of raw land as an investment and end up missing out on one of the greatest opportunities.
There are many benefits to owning land. First, land ownership gives the owner peace of mind. As a long-term, tangible asset, raw land doesn’t wear out or depreciate, and there is nothing that can be stolen or broken on it. It is a limited resource that is relatively inexpensive to own and requires little maintenance. In other words, it is a relatively hands-off investment. There is also little competition in the land market as most real estate investors are focused on investments such as rental and commercial properties.
Contrary to popular belief, there is a large profit to be made in land ownership, but it is not a get rich quick scheme. Here are a few examples of ways to make a profit through land ownership:
- Buy and Hold – Purchase land at a good price, hold and sell after appreciation.
- Establish a Farming Lease – Farmland has historically produced larger returns than stocks, bonds and mutual funds over the long run. A landowner can normally earn enough from agricultural leases to cover the taxes and insurance, and still make a small profit. However, keep in mind that farmland is normally more expensive and will require more capital to get started.
- Establish a Hunting Lease – Hunting lessees normally take excellent care of the property they are leasing. They also do a great job of patrolling the property and keeping away poachers. As in a farm lease, landowners normally earn enough from a hunting lease to pay the taxes and insurance.
- Offer Owner Financing – Land loans can be difficult to secure from traditional banks at times. Offering a buyer owner financing is a way to sell the land and earn interest. Most owner financing deals offer higher interest rates than traditional banks.
Raw land ownership can certainly be a great investment for someone looking to diversify their portfolio. As a land professional, I always recommend utilizing the expertise of your local National Land Realty agent so you can explore your options and determine if land investing is for you.
As granddaddy used to say, “They ain’t making any more land. Get all you can!”