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Finding the Gold in Land Investments



Real estate investment does not necessarily mean buying brick and mortar buildings. In times of housing estate slump or mortgage crisis, land investment is actually what you need to look into for a lucrative venture. The reality of real estate investment does not lie in the functionality and style of the building; it lies underneath it –the land. The physical structure actually depreciates over time while the land underneath the structure appreciates in value.

In real estate market, there is always a buyer and seller market trend. A buyer market happens when everyone can get a great piece of land for a low cost. As the trend shift into a seller market, everyone would want to be in a seller position to make off a profit. In today’s buyers market, land investment is not to be ignored for being the key to your financial freedom. It is a guaranteed fact since 1940’s where land investment automatically appreciates in its value year after year.

Always do your research before buying any land. Consider the zoning, planning, and environmental issues. Then you buy a nice piece of land during the buyers market and wait some years. The initial investment for the piece of land will have paid itself as the years go by with the appreciation rate going for it. So when the market switch from buyer dominated to seller dominated, you would be the seller when it switches.

Land investment has a number of benefits:

* Price negotiation. When you purchase land, you have higher opportunity to negotiate the price with the vendor. Oftentimes, you can buy land priced below the market value so you earn profit on the day of purchase itself.

* Low risk. Land investment is considered a low risk investment because there is a limited amount of it and the price of land generally increases in value over a period of time. Since the number of households is set to grow rapidly, land will always remain constantly in demand.

* Strong returns. Soaring demand for houses from an ever increasing population gives land investment a high potential to earn healthy returns. Investors with a 5-year land investment can earn an equivalent of 30-35% annually which equates to an estimated 400-450% of compounded returns.

* Passive income. Land investment gives you a completely passive income. Unlike a house where you have to do maintenance, land require none of that. If you have a grass land, you can even rent it out to people who want to put horses there for grazing.  A paved plot of land can also be rented out as a car park to generate income.

Besides the above benefits, many investors choose land investment as a way to sidestep certain government legislation. For instance, agricultural land and forestry is a great way to achieve certain tax breaks. Owners of these types of land do not have to pay inheritance tax as long as they have been in possession of the land for more than two years. With certain loopholes, land investment can help you to avoid capital gains tax and gives you profits at the same time. 

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