Most investors choose stocks and rental income to get a return on their money. But what about raw land? What are the benefits of it compared to the other two?
Most investors do not like to purchase land because there is no yield, and to get to have yield you must develop the land in some way, which requires not only more money but time and work. Thus, there is less competition, which is easier for you to acquire land at a more favorable price.
Easier Entitlement Changes
This depends on where the land is located, but it is generally easier to change the zoning of raw land then its is for land with a structure and tenants in place. Though the process may take time, if it changes to a more valuable zoning, your land value goes up instantly.
Unlike investing in stocks, you have more control on what you want the direction of your land investment to go. You have control on what kind of structure is best suited for the area and the best way to design it. You can also hold off on building or build right away depending on the market conditions.
Peace of mind
Another great thing about investing in land is you do not have to maintain it. Nothing gets stolen or broken. Land does not wear out. There will be no additional expenses in maintenance costs.
You Don’t Have to Be There
With empty lots, you do not even have to be physically present to purchase it. You do not have to travel all the way to inspect. You can just look up the empty land on google maps and the details within the land’s local municipality and title company. This allows you to purchase in areas outside of where you are located, giving you a bigger market with none of the headache of owning out of town rental income.
Lenders will loan on it
As long as you have significant equity or down payment in the land, you can have a loan on it with a relatively low interest rate. This is because lenders understand that most land does not lose value of what it is appraised at, and to them its a strong secure investment as well.