Why Invest in Raw or Vacant land?

A traditional investment portfolio might consist of stocks, bonds, precious metals, currency, or even a new form of electronic currency. But recently investors have been turning away from more “conventional” investment options and have been turning to vacant land. Friends and family ask me all the time, “Why should I invest in vacant land?” My answer is always the same simple answer, "Money!"

For hundreds of years, Land has been a priceless commodity. We need land to grow, but we never seem to have enough of it. That is why in little to no effort at all to assure a great return on investment (ROI).  The essential factor dependent on the amount of your ROI is the path of growth.

To get the best results when investing in vacant land, research the surrounding areas. Figure out the demographics, the future development plans, population, local attractions and landmarks associated with the area your planning to purchase. Purchasing a piece of land in an area where the population is prospering and growing will be your best way to solidify your investment. The value of land can slowly appreciate, similar to watching paint dry, or it can skyrocket instantaneously overnight.

It does not require a seasoned investor to understand how to make a vacant land investment. It just requires a patient and research-driven investor.

3 Things you need to know about Ranchettes

Ranchettes are not considered ranches.

    Ranches are extremely large plots of land - they can be well over a couple thousand acres - where the most common “product” on a ranch is animals and livestock. On a ranch, you can usually find the main residence, more than one barn, other structures needed for cultivation and maintaining animals, an agriculture section and another part dedicated only to livestock.

Ranchettes are not farms.

    A farm is much like a ranch in that it is generally a large plot of land. But a farm has a focus on everything agriculture-related, where crops are grown and cultivated, rather than animal and livestock-related. Farmers also have what's called fiber farms. Fiber Farms are where raw material such as silk, cotton, wool or hemp is grown and picked. The word “farm” itself can mean any plot of land that is dedicated to a specific crop, raw material or product.

Ranchettes are a hybrid between a ranch, farm, and house.

    A Ranchette is not as large as a farm or a ranch usually maxing out at 40-50 acres. Usually placed on the outskirts of a city where its far enough away to create a country living lifestyle, with the convenience of a large city nearby. These plots usually contain one house, a small garden, one to two barns and a small cluster of livestock or animals. These animals could be everything from a couple heads of cattle, chickens, goats, or maybe even a Llama or two. It’s the easiest way to have a quiet home life without living in the “sticks”.

Three things to Consider When Deciding on How Much Land You Will Invest in

Different land investments vary in size and price. Some more affluent land investors might have millions of dollars to invest in a new portfolio and some smaller investors start with only a quarter of an acre! Your first investment will mainly be determined by the capitol you have available.

Here is a list of 3 quick and essential things to consider when buying land:                                                    

1. Budget

Budget is the primary factor in figuring out how much land you would like to purchase. First you’ll need to figure out how much extra income you have to put towards the investment. The wonderful thing about vacant land is the variety of different land options for different types of investors as well as different price points.

2. Location

After determining your budget, location is key to figure out where you want to purchase your land. Depending on where you would like to make your investment, price per acre will fluctuate. Sometimes buying land in a rural area is significantly less than buying near a city center. If your reason for buying property is to develop it, privacy and lot size may be at the top of your priority list. 

3. Improvements

The last thing to consider are land improvements. Making any improvement on the land may not be needed if you are purchasing land solely for investment purposes. The cost of clearing the land is something you will need to consider if you plan to develop it. If you have a small lot that isn’t heavily wooded, you can probably clear it yourself with some rented machinery in order to cut back on costs. Additionally, one of the most valuable resources on your lot could be the wood or vegetation on your land. For instance in Florida, palmetto berries are a great way to make a profit from your property. Palmetto bushes are native to Florida and widely known, but many people don’t realize that these berries are used to treat prostate problems, including cancer. Research labs will pay heavily for the cultivation of palmetto berries.

Understanding the Motivated Seller

When I first started investing in real estate, I did not realize the amount of land that I could purchase with the money I had in my pocket. Sometimes, I even had the opportunity to purchase land for under $1K!

I always thought that the idea of investing in land was so unattainable. I had assumed that people who invested in real estate had worked hard to acquire their property, that they were using it as a long term investment,and would eventually sell it for a major profit (like what I was planning to do). You can imagine my surprise when I discovered that some people would let their valuable land go for less than a thousand dollars!

Since then, I've had the opportunity to purchase dozens of properties  that were priced well under the market value. The trick is to determine how to find a motivated seller in a vast market. In the current market, there are many motivated sellers. Some of the common reasons people try to sell their land quickly are: 

• People who purchased land with the intent of developing it and their plans fell through
• People who think of the land as more of a burden than an investment
• People who need cash now

These type of people are in your state, your country, your town and sometimes in your own neighborhood. In some cases, these sellers are not going to take any action at all and it is up to you to find them. Use this as an opportunity to take the initiative and search them out! 

That being said, what type of people are we actually searching for when we are looking to invest in land? Here are a few examples:

• Sellers that can’t afford mortgage payments.

Note, these plots of land are not foreclosed properties. The seller could be going through a hard time in life, they could just need the money or they could be just barely making payments on the land and unloading it would help ease their financial burden. 

•  Sellers that have delinquent taxes on property.

Some people own land with no mortgages/money owed on the property, but they can’t afford the property taxes. It’s normal for local or state municipalities to foreclose on properties that don’t pay taxes over an extended period of time. Therefore, instead of loosing all the money they have invested in the land by having it taken by the government, they decide to sell the investment quickly and see less money now rather than no money later.

• Sellers that have inherited property that they don’t want anymore

People receive inherited property all the time. They don’t see this land as an asset, but rather a hassle that they would rather live without. The majority of the time these owners don’t  want to go through the effort of selling a property or dealing with real estate agents and mounds of paperwork and research.  Perhaps they haven’t even been to the property and have no emotional attachments to it. This could mean they are willing to part with it for less than retail to take away the nuisance of having it in the first place.

Therefore, if you see an opportunity and have the means to purchase a property priced well, take it! It will most likely turn out to be an extremely wise decision and great investment! 

3 Things To Consider When Buying Vacant Land

What’s coming next? What options will I have to make money before I sell my new asset? How liquid is my asset in a time of crisis? These may be the questions a potential should ask themselves.

The basis of of any investor’s  always be made by determining what’s coming next. They are going to have several options to utilize the asset before they sell their asset. Finally, they will know how easily that asset can be liquidated into cash in case of an emergency. All these things are especially important when an investor decides to purchase a new plot of land.

What’s coming next? Does the investor know that this new land purchase will be in the path of a growing economy? Do they know if it’s near growing metropolitan city? Will a company want to buy this land from them for its natural resources? Will a company want to build a factory on the lot purchased? Being able to take all things into consideration will allow the investor to make the right decisions by looking into the near and far future and seeing what lies ahead.

What opportunities will I have to make money before I sell my new asset? One of the obvious options is by renting land to larger companies. Will wind or solar power want to rent the space from me? Does my lot get more wind or sun? Is it in a valley? Is it flat enough for solar panels? Can I create connections quickly enough in the solar or wind industry to make a quick profit? Knowing what you are going to do with the land before you buy is a great thing to contemplate before you buy your land.

What is the liquidity of my asset? Meaning, how fast can I off-load this asset in a time of need for myself, my family or my company. An asset that you can not sell to someone else quickly might not be an “asset” to you at all. Finding a plot of land for a reasonable price that you know will increase in price over time will increase the liquidity of your land. Also, liquidity might be determined by how much land you can donate and turn into a tax write off. Investors all over the United States are donating land to save other parts of their income. Land can be a simple way to lighten your tax burden in a couple years when you need it the most (especially if you buy it for a lower price and inflation brings its price up over time). It could be the difference between bankruptcy and foreclosure and staying alive.

Finally, what all investors need to remember when buying land is that it is full of different commodities - raw materials that can be bought and sold. Your job as an investor is to determine what commodities can be used to make short term gains while you wait for the long term payout.

Why Property Without A Structure Can Be A Good Investment

What do you normally think of when you think of real estate investment? Most people think of the HGTV version of real estate investment, the whole “let’s go spend a crazy amount on a house, spend even more money to fix it up, then, sell it and make millions.” This is a nice notion, but unfortunately it does not always work this way, especially with the real estate market being as unstable as it is.

What if you could have a practical real estate investment that always appreciates and almost never depreciates? This investment would also be something you don’t have to constantly maintain it, you don’t have to be professional handyman, you wouldn’t have to deal with tenants, you would almost never have to deal with a banks red tape, and there is a high possibility you could make money on your investment in only a few months after purchase. Who wouldn’t want that type of investment?

Buying property or vacant land without any structures on it is the easiest way to invest your money, forget about it, and just let it grow. Land without structures mean no midnight, “something broke again” phone calls. It means no rushing to make sure everything is perfect before you flip the house. It means less insurance problems, no headaches, and no worrying about figuring out how you are sinking all your money into a money pit that is probably not going to return its investment. Two unfortunate “money pits” in life tend to be boats and houses. This is because houses depreciate with age, just like cars, boats and electronic devices. Land, on the other hand, has historically always appreciated in value over time.  So then why do people invest in multiple income properties? Probably because they love working way to hard for little to no return.

The only cost of vacant land is merely the cost of the land itself. You don’t have to “do” anything to it. That being said, you can lease or rent it out to other people who can utilize it. In which case you have created a great source of passive income without spending a dime on structure! Oil companies, natural gas companies, solar companies, wind companies, ranchers, farmers, hunters are just a few examples of who might be interested in utilizing the land! Thousands of companies need land to harness natural resources and are more than happy to pay for it.

So along with the fact that you won’t have to deal with banks when purchasing, you also won’t have to worry about making a quick turnaround (like flipping a house).  Another positive to purchasing vacant land without a structure is that you do not have to take care of maintenance, and you won’t have to tender to your tenants. Finally, the easiest part is that don’t have to do anything with the land other than just let it sit there, all while earning a passive income off of it.

5 Reasons Why Vacant Land Is A Good Investment

 With vacant land, you don’t need to “do” anything to the property.

You have the option to not touch your land at all or to make it into something beautiful, what you do with it doesn’t matter. Land will always appreciate in price over time due to the population increase and the fact that companies needing large open spaces are being moved into more rural areas. The simplest thing an investor can do to their vacant land is turn it into a nature sanctuary. In which case you won’t have to “do” anything! Just allow mother nature to run her course and your lot will return to its natural state.

 “Hands-Off” Investment

Don’t worry about dealing with tenants, leaky sinks, toilets, mold, pet issues, bursting pipes, broken a/c, and any of the other late night “it’s broken again” issues.  After your purchase, the land will just sit there, and nothing happens to it unless you say so. You can create an income with your property, in which case you won’t have any maintenance upkeep and it will become a reliable rainy day fund.

You can create income with vacant land.

If you choose to go this route you will have the opportunity to rent or lease all or part of of your land to larger companies. Depending on the location and type of land, it might be ideal for wind and solar energy. Wind energy is a clean, renewable, and lucrative new form of energy. The use of which is only expected to increase in the coming years. In almost all of these cases a large piece of land is simply leased out by a power company. They will then place a wind turbine on the land, maintain the land around the turbine, and filter out power to all the surrounding areas. Solar energy companies are also looking for land to harness the power of the sun. Solar energy can be used to power everything from a city to a house. You can harness it yourself by purchasing solar panels and all the other equipment or you can also lease the land to a larger solar company and reap the benefits of having them take care of your land. But this is only the tip of the iceberg when it comes to leasing land for profit.  This isn’t even considering all the farmers, ranchers, timber companies! Thousands of companies need land to harness natural resources and are more than happy to pay for it.

Land is very inexpensive to own as a long-term investment.

More money than mutual funds, more stable than stocks, less inconvenient than income properties, why wouldn’t you want land? It is a cheap ,easy way to invest money into an asset that can be held over time or liquidated at the drop of a hat. Holding the right property for the long-term can make a lot more sense than any other retirement plan created.

They aren't making anymore of it.

You can’t build large quantities of land quickly, so when progress is halted due to lack of land, people who purchased the land in the path of growth have an awesome opportunity to make money by renting properties or by selling properties.