The mark of a true entrepreneur is the ability to see potential. Yet in this analytically driven age, investments don’t have to be as unpredictable as some might have been in the past.
After factoring in birth and death rates, as well as human migration, the population of the U.S. is currently increasing by one person every 19 seconds.
Recognizing the country’s projected path of continuous growth, much of the untapped land in the United States is destined to become inhabited. Whether you’re looking to invest in land in the next 5 days, months, or years, here are 5 of the top reasons you should buy land.
1. Land Is Extremely Affordable
Regarding bidding wars, the market for buying land isn’t overwhelmingly competitive like it is with residential or commercial real estate. The majority of landowners don’t actually live near their land. In fact, many owners reside in a completely different state, making them highly motivated to sell. Knowing this, there’s a good chance your agent will be able to negotiate far under the initial asking price.
2. Expenses Are Minimal
When owning land, the expenses are minimal for a variety of reasons. There aren’t any utilities to pay bills on regularly, and there are no building structures to maintain. In many cases, you might not even have an insurance payment to make. The government’s taxes on land can also be considerably low. For the most part, you are able to let the land sit untouched.
There are also ways to mitigate the small expenses while owning land. Despite the low fees associated with taxes and upkeep, over a matter of years, they do accumulate. When able, you can offset costs by leasing the land for cattle, farming, hunting, festivals, or any other opportunities where there’s interest. In select circumstances, you might even turn a profit.
3. Land Can Be a Great Long-Term Investment
Consider the city nearest to where you grew up. There’s a good chance when you revisit or reflect on that area you realize how much the region has drastically expanded. We’ve all witnessed previously vacant stretches of space be transformed into suburban housing communities filled with not just homes but also millions of square miles of commercial real estate.
Similar to the best stocks, those who make the most money bought in the earliest. Since the expenses involved with owning land are so low, you can hold the land and wait until its value appreciates. This is why buying land is so often a highly lucrative investment, long-term.
4. Where There Is Risk, There Is the Most Reward
This adage carries weight: the greater the risk, the greater the reward. The main risk in buying land is owning a plot that doesn’t go up in value and is difficult to re-sell. There are countless factors outside one’s control that could eventually determine a good or bad investment.
For example, those who purchased land in the populous state of California last century have seen ROI, while those purchasing land outside cities like Detroit in more recent years has had a more difficult time seeing that expected financial return.
5. Land Is Out of Production
Nearly everyone has heard the old-but-true cliché about land being the one commodity nobody is able to continue manufacturing. Unless some hotshot entrepreneur finds a way to get people living on the moon in the near future, we’ll continue dividing up the limited room on planet earth to develop more housing, businesses, and all-around civilization.
If you ultimately decide to buy land, be ahead of the pack and consider areas that are trending upward. It’s only a matter of time until all that surrounding acreage is targeted by builders ready to carry out new construction.
How Do I Decide Whether to Buy Land Now or Later?
There’s a good chance you see buying land as an investment worth pursuing. However, if you’re trying to decide on whether to buy vacant land 5 days from now, in 5 months or as far down the road as 5 years, consider the land you’ve been keeping an eye on. Is the price right now as low as it might go? In half a decade, will the land already be snatched up by other investors?
Here’s another tip: if you’re able to speak to the agent in charge of selling the land, request that you be notified when/if they receive another offer. Although it is illegal for the agent to tell you the amount of the competing offer, you can at least be given a chance to make an offer of your own.
If land investment checks all your boxes, sometimes the 5-month route is the way to go, allowing you to monitor its status before pulling the trigger. Doing this could help ensure you make a profitable decision regarding the purchase of land.