Is Buying Land a Good Investment?
- June 30, 2023
Land does not depreciate like other assets, and when other assets are hurt such as a recession, land has historically held up much better in terms of value when compared to other real estate assets.
Purchasing land allows you to use the property however you desire, whether renting it out or keeping it for your own use. There are so many uses for land, and you cannot create more of it.
If you are looking for a tangible, solid investment that can’t be damaged by war or natural disasters, and will likely appreciate annually, then buying land is the right move.
Uses of Land
Land is an asset that can be used for both personal and business purposes. Land can be used to start a business, whether that’s opening a warehouse for your existing business, starting a farm, or anything else. It can also be a place to live. There are not many assets that can be as flexible and offer as many different opportunities.
You can own your land and live on it while collecting appreciation, or you can rent it out.
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Appreciation
In the 2008-2009 recession, the stock market fell over 50%. Housing prices fell over 30%. Guess how much land fell. According to CNBC Money, farm value only fell 3.2%.
Not only is land a great protection against decreasing asset prices overall, but in a normal market, condition land appreciates on average 3-5% a year. This depends on the type of land, assets on the land, and different characteristics.
If you own a lakefront or mountainside piece of property your appreciation may look different than a vacant piece of land in a flat area. From 2020-2021 we saw an average increase in land value of near 6% according to the US Department of Agriculture.
You can bet when you buy a piece of land and hold it, its value will increase over time.
Its Cheap!
Over the last 2-3 years there has been a large migration of US citizens into the state of Florida. At the time of this writing, Florida has one of the hottest real estate markets in the country.
Even with that, the average cost of 1 acre of vacant land in Florida is $6,100 with the lowest price being as low as $4,000. Of course, this has no home to live in on the property but regardless is a fantastic price to be able to get into real estate in the hottest state in the US.
Other states are much cheaper, with some acre properties as low as $1,500-$2,000. According to the USDA, the average cost of farmland in the U.S. is $3,160 per acre.
Potential For Large Profit
Everything we have spoken about so far is enough reason to look at land as a potential investment. Not only does land have those properties but just like real estate, it has the potential to deliver enormous profits from flipping.
Our business at LIO is to teach people how to flip land. We do so by contacting interested sellers all around the country via direct mail, buying their property from them at a discounted rate, and reselling it for around market value.
We deliver these sellers very quickly, cash transactions to get them out of a tricky situation, or just pad their pockets a bit more. Land Flipping is personally our favorite way of investing in land.
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!
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. The numbers do not lie.
This is definitely a much more active way of utilizing the land as an investment but had to be touched on regardless. It is for more active entrepreneurs rather than passive investors.
Is It Worth It For You?
Here we listed a bunch of amazing uses for land. It is incredibly versatile and can meet really any of your investment needs and goals. The best part is, although land is old, not many people take advantage of it, and these benefits we discussed here today.
Will you?
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