In 2022, there are many ways to get involved in land. A variety of assets can expose you to land & its value, and you can absolutely find one that best meets your investment needs. No matter if you are a conservative investor that doesn’t have a lot of time or an aggressive one with more time on your hands you can find a way to make money with the land.
Passive Vs Active Land Investing
Almost all forms of real estate are active forms of income. This rings true for rental properties, flipping houses, wholesaling, land flipping, etc. That being said, not all forms of real estate are active. You can expose yourself to the land real estate market passively through Land Stocks, or REITs (real estate investment trusts). You can put money into these money market instruments, and let them grow passively. It does not require any work on your end, only those who manage the company or trust. It is also worth noting that there is a large difference in profit potential between active and passive forms of land investing. More commonly, the active forms of land / real estate investing are much more profitable.
Passive Investing In Land - Land Stocks & REITs
One of the many ways to gain exposure to farmland without going out and buying a farm yourself is by investing in land stocks or agriculture businesses.
For example, if you want exposure to farmland you could invest in companies such as Monsanto (NYSE:MON), Deere & Co (NYSE:DE), and Archer-Daniels-Midland Co (ADM).
Land stocks are a great option for those with limited time and work restrictions but again are limited in terms of potential upside you can find.
REITs provide broad exposure to the real estate investment and land market. They are easy to buy, sell, and diversify. Most REITs are designed for long-term holding because their prices can be influenced by Federal Reserve interest rate hikes or cuts.
Investing in REITs is as easy as investing in stocks. They are traded like regular stocks on the stock market, and you can buy or sell them whenever you want.
Actively Investing In Land - Land Flipping
Land Flipping is an active form of land investing but it is the most profitable and least competitive sector of the entire real estate market.
Land flipping is different from buying and rehabbing a property to sell it, or putting a tenant in to live on that property.
This model differs as you are never doing anything to the land. You are simply buying vacant and raw land at a discount, looking for .30-.60 cents on the dollar and then reselling the property for slightly below market value.
It is active in the means of setting up the business, establishing deal flow, and tasks like that but can easily be delegated out once the processes are in place. This means that land investing has the potential to become a passive land investment vehicle but still provide astronomical returns.
That is the most appealing part of land investing, the profit potential involved. Our average land flip deal was $22,000 in 2022, and $17,000 in 2021. Someone coming into the land flipping industry has the potential to make anywhere from $250,000 to $1,000,000+ should they have the ability to scale their business up over time. These types of returns are simply not possible to get in other passive investments, and are hard to beat in any investment field.
So the question for you is, which is best for you? Depending on your time and goals, it may be more worth it to take the conservative approach and put your money into passive investments like land stocks and land REITs. If you are a bit more aggressive with your goals, have more time on your hands, and want to try something new check out our discord to network with other land investors and aspiring land flippers. Here you can learn alongside them, ask questions, and present your deals when you get them.