Why Invest in Land? Is Buying Land a Good Investment? Should I Be Investing in Land?
Investing in land and buying land is not a well understood concept. Most people don’t know for sure how land buying works. And even fewer people understand how investing in land is a smart strategic move for diversifying your portfolio. You don’t want to be one of these people.
There are lots of people who have never even considered buying or investing in land. Understandably so - people aren't always willing to play outside the box when it comes to their money. I’m not saying that buying land is the ‘be all end all’ of investing, but you should definitely be open to including it in your portfolio.
You owe it to yourself to at least be educated about the different types of real estate investing. Most of you are familiar with the fancier and more glamorous real estate methods. House flipping and home renovation shows take over TV channels. Robert Kiyosaki made townhomes and other building investments look easy.
No one is talking about why land is a great investment. That presents you with an opportunity. These 12 reasons will convince you that land is a fantastic investment, and will make you want to put your money in dirt – literally.
1. Land is a Finite Resource
No one is making any more land! I know Elon is out there trying to populate Mars, but as of the 21st century, the country lines are pretty well drawn. We’ve got a set amount of land in the USA. Buildings can be replaced and demolished, whereas land is a valuable and finite resource, with only limited quantities available.
I love the quote below. I know it’s overused in the land niche, but it’s true – forgive me if you’ve read it dozens of times already.
2. Land Gives You Peace of Mind
Land is the well-behaved, ‘golden child’ of investing. Land can’t be stolen or destroyed. No extra effort from you is required. There's nothing to protect, maintain, or renovate. There's nothing to ‘do’. Land in its natural state will always be worth something!
A key component to investing in land is to buy property that can have something ‘done’ to it one day (e.g. suitable for building or housing). This will make sure you have no maintenance to "do" now, but your land will be worth something in the future.
3. Land is a Tangible Resource
Land cannot vanish or disappear like shares or stocks. If tomorrow the world decided that money was just an useless piece of paper and has no value, land will still be something. It will be something tangible and physical that is yours, regardless of what the global economic situation is. Currency and monetary values may change, but ownership does not.
4. Land has Low Competition
In this real estate niche, there's low competition. Most people (especially those with a lot of investment capital) are focused on the shiny and glamorous aspects of real estate investing – condo buildings, developments, house flipping, multi-units. It’s not their fault, almost everyone is focused there.
These methodologies sell out conferences and consume TV channels all across the country. But sometimes to win, you have to be where others aren’t.
5. Land is Inexpensive to Own
Land is inexpensive to own over time. There are no mortgage payments or utility bills. There are no extra charges for the best internet package. No roof that needs to be replaced.
Property insurance is not required, even if you do decide to purchase it’s minimal. Property taxes are minimal - I've seen lots with property taxes of $3/year. THREE DOLLARS! That's less than a cup of coffee. Your asset sits quietly in the background, costing you almost nothing and silently increasing in value.
6. Land has No Government Implications
When purchasing and investing in land, there are no risky government legislations that owners have to pay attention to. The Dodd-Frank [introduced by Obama in 2010, as a response to a massive economic downturn in the U.S.] applies heavy rules to real estate but does not apply to vacant land.
The Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) [introduced in 2008, as a response to the mortgage crisis at that time] does not apply to transactions only dealing with vacant land. No legal implications to worry about. No need to hire lawyers or paralegals to help you meet government requirements.
Disclaimer: We are not lawyers! By reading this article, we are not giving you financial or legal advice. We have shared our interpretation on constitutions such as the Dodd-Frank and SAFE acts. These views should not be the sole source of information before performing a transaction, we still encourage you to discuss potential transactions with an attorney.
7. Land is Great to Hold Long-Term
Land investing is not for the faint of heart or someone looking to make a quick flip and create immediate income. It’s for someone with no immediate plans to develop their property.
It's for the patient, smart investor, someone who is willing to hold for the long-term, or pass it on as a legacy. It’s for the investor who is 10 – 15 years from retirement, who want to diversify their portfolio.
Land is a smart long-term hold, allowing you to win the benefits of rising values. Especially if you buy in an area that’s due to expand and grow.
8. Land Increases in Value
Land is less costly to buy than developed real estate, simply because there’s nothing there (obvious, right?). There are no improvements or additions to it that make it more valuable.
You can purchase a valuable and quality piece of land for less than $1,000. If you do your due diligence properly and make sure that the piece of land is in a path of growth, it could be supremely attractive to future developers. You could sell that property for as much as x5 or even x10 what you bought it for! That is some easy profit!
9. Land is Easy to Purchase
When purchasing land, you don’t need to rely on an expensive bank loan or mortgage with unfair and high interest rates. You might not need to take out any loan at all. Most of the time, if it's a private sale, you don't even need to get a credit check! A lot of private sellers, like myself and my company, Compass Land USA, offer affordable financing plans that make it easy to buy land on any budget.
And you can almost always pay cash for land. Land is very easy to purchase, and for the most part, you can buy when and where in the U.S. you want.
10. There’s Lots of Land Available
Many vacant land owners are willing to sell. Often times people bought property that they had big plans for and never got around to, or maybe it was inherited and they didn’t really want it to being with. Maybe they’ve experienced a trauma recently and are looking to simplify their lives. Maybe they just want some cash.
Or perhaps the owner lives out of state, and they have no emotional connection to the lot. Combine that with low niche competition, and you've come across a well-kept investing secret with high availability. You take your pick of the crop!
11. Land is Easy to Buy
Land buying is simple. Like most things these days, the entire process can usually be done remotely – all online. This is a very attractive quality! If you live in Tennessee and wanted to invest in California property, you don't need to travel the 2,000 miles to get there. You simply give the owner a call or email, and discuss from there. You can get everything done with your cell phone from the couch!
It's a simple process that allows you to sign documents online and send money electronically. In some counties, you can even record deed transfers online. So easy! At Compass Land USA, we make it simple and safe for you to buy land. And we cover all closings costs. One less thing for you to worry about in an already easy process.
12. Land Gives You Freedom
Freedom! Land gives you the opportunity to be creative and mould property how you want. You can hold it for a lifetime and leave it as part of an inheritance. You can purchase land, save up some money and hold it for a decade, and then build your dream home! Or you can create your own golf course, paint ball arena, dirt bike track, there are endless opportunities!
If you need inspiration, check out this list of 44 creative ways you can use land. Some of them are very unique.
That’s Why Buying Land is a Good Investment
Investing in land isn't just for the rich and the famous, the Rockefellers and Kiyosakis of the world - it's for everyone! You've done yourself a huge favor by taking the time to educate yourself and learn why land is a fantastic investment.
Land is a tangible, finite resource that is easy to purchase. Land requires no maintenance and is less expensive than other real estate facets, especially to own over a long period of time. Land ownership requires no additional work from you, leaving you with peace of mind. This real estate niche has low competition, and is just waiting for you to get involved!
At Compass Land USA, I work with you to help you find and buy land on any budget. We have a safe and simple purchasing process, and everything can be done completely online.
If you want to learn more about how you buy land, or if you’re looking for property to invest in, leave me a comment below. I’d love to help you. Here’s to your land ownership!