When thinking of investing in a physical asset, most people tend to think about investing in houses and apartments rather than land. It’s understandable why you may feel this way, but you’d be missing out if you didn’t read more about the potential of land investing as a form of income. Especially, when you consider the fact that the barrier to entry for investing in land is much lower than in real estate.

The average value of an acre of land in the United States was $12,000 in 2019, and some states are much cheaper than others. This is much more affordable for those with less capital to use.

What is Land Investing?

When you break it down, land investing is buying a piece of land with the intention of making a profit from it. This can be through land flipping, which is buying land and then selling it at a higher price. Another common method of land investing is to use the land to generate revenue, such as with farms, and residential and commercial developments. Although, trying to generate revenue from the land can be more labor-intensive and difficult than land flipping.

Like any form of investment, there are pros and cons to land investing, and you should be aware of them before you get started.

How Do You Begin Land Investing?

So, now you know a little about land investing and you’re interested in getting started? Great. Now you need to learn how to begin investing in land.

How To Buy Land

You want to begin buying land for your investment portfolio, now where to start? There are a few different ways to find and buy land for your investments. Each of these methods has its own advantages and disadvantages.

Buy Land Online

There are already several websites online where you can browse available land and filter it down to your requirements. This is one of the easier methods to find land to buy and some sites will guide you through the process or give you an idea of how to do it.

Learning Through Experts

There are experts like us that can teach you all about the process of investing in land and things to look out for. Over time, you will become an expert at land investing. You’ll be self-sustaining and know exactly what to do to maximize your income.

Using an Agent

Buying property through an ethical agent is another option to buy land. NAR real estate agents must act transparently for both parties in the transaction, granting you greater security. The agents will also be able to assist you with the paperwork and can advise you on tax and legal aspects of the property, so you’re better protected.

Contacting Land Owners Directly

This is a method of buying land that requires a bit of work but is by far the most effective way of getting a good deal on a piece of land. Creating personal relationship allows you more flexibility with negotiating. The extra work spent finding landowners is made up for by the increases that you’ll see in your profit margins, especially as your investments grow.

Making Money To Begin Land Investing

You’re not going to get very far with land investing if you don’t have money to invest in land in the first place. Thankfully, as mentioned before, land investing has a lower barrier to entry than real estate. 

You can find some plots of land for only a couple of thousand dollars, and lower-priced states may be a good place to start. You can look around at the cheapest and most expensive states for land in the US to get an idea.

Begin Saving Money

Once you’ve decided that land investing is something you want to try, you should begin saving money straight away, if you don’t have any savings already. If you want to speed up the process then one of the best things you can do is cut out any expenses you don’t need every month- it will help you to reach your savings goal quicker.

Get a Second Income

If you think that naturally saving the money isn’t quick enough for you, then it may be good to get a side gig, so you can earn some additional income and put that towards your savings. There are so many options out there, from being an Uber Driver to picking up a small weekend job at a bar, any income will help you reach your goals quicker.

Deal Funding

Sometimes, you may see a piece of land that you know is perfect, and you may not have access to the capital to make the deal yourself. This is where deal funding comes in. You can use a deal funding partner to get assistance with raising the money to make the investment. You can negotiate a profit-sharing agreement with the agent based on the specific circumstances of your deal. This can be a great way to accelerate your portfolio if you have no money.

Invest With a Third Party

This could be a friend or a family member who wants to help you along with your investment journey. If you can come to an agreement to pool your money together to buy a plot of land, then you can both begin reaping the benefits of land investing even sooner. Although, you will want to be sure of your rights and the terms of your agreement.

Land Investing Mistakes To Avoid

Taking Everything at Face Value

Like with any market, land, and property is one where you have to do your due diligence. People trying to sell you land may try to inflate their value, or even outright mislead you about certain aspects. You should always visit a property you’re going to buy and scrutinize the promises of the sellers to ensure you’re not getting stung.

Not Considering the Legal and Tax Ramifications

When you’re buying or selling a plot of land, you are going to be going into a world of legal and tax regulations and it’s important to know what you’re doing to avoid disaster. For example, certain pieces of land will have restrictions about what can be done to them and easements may grant third parties access to valuable resources or use of the land you buy.

Furthermore, when you’re selling land, depending on your locality, you will be expected to pay taxes on the sale of any land. This means that you will need to factor tax considerations into your profit calculations when making a sale. If you don’t you may end up making a loss on the sale.

Not Considering The Commercial Viability of Land

There are some aspects that can make certain land less commercially viable, or will cost you significantly to make it viable. For example, if the land is unsuitable to be built on can significantly limit the realistic selling value. Considering factors like these beforehand will save you money.

What To Do With Your Land Investing Profits?

Now that you’ve made a bit of profit, either through selling or using your land, what do you do? One of the best things that you can do with the profits from your investments is to take any that you might need for you personally and then reinvest the rest of your profits into making more investments. That way, you can scale up your operation and begin to make even bigger profits.

Land investing is an investment practice where the more you do it and get a feel for the market, you will begin to make better decisions and learn to spot a great deal. Why not use your profits to accelerate your growth? Yes, most people want nice things, but there will be time to spend your money on luxuries later.