Vacant land is one of the most overlooked investment opportunities in real estate. Many investors don’t realize the potential benefits vacant land has to offer. You may be a first-time investor hoping to enter the market or an experienced investor looking to diversify your property portfolio. Either way, vacant land is worth a look.
Let's explore the top benefits of investing in vacant land so you can decide if this real estate investment strategy is right for you.
1. Affordability
Vacant land is typically a more affordable long-term investment than developed land. That's because vacant-land owners often face lower property taxes and fees than those who own developed land.
Also, because vacant-land owners are always absentee owners, they’re often highly motivated to sell. The vacant land isn’t their primary residence, so they generally have little emotional connection to it. This means you may be able to negotiate a lower price or even seller carry-back financing.
2. Good Cash Investment
It’s also common for vacant-land buyers to buy the land outright with cash. This gives you total and direct ownership so you can avoid paying costly mortgage interest and loan origination fees.
Owning the land outright can also provide a sense of security as it’s a physical asset that's there for the long haul.
3. Profitability
Although the land is empty, there are still many ways to earn a profit from it. You can hold onto the land until it increases in value, then sell it for a profit.
Another option is requesting a change in the zoning laws for your property. The process of requesting a zoning change will vary depending on local regulations. However, you should expect to file a written application before presenting your case at a hearing in front of the planning commission or zoning board.
Some investors make a nice profit from renting vacant land to nearby businesses or farms for their use. Finally, you might buy vacant land to build residential or commercial structures.
4. Low Maintenance
Vacant land is generally considered a “hands-off” investment. It typically requires little upkeep from investors. This is especially true if the land isn’t affected by erosion or flooding. Depending on the type of land, you may be able to leave it as it is. Or, you might just need to arrange to have it mowed. The beauty of vacant land is that it's likely to remain in the same condition for years to come — and increase in value.
Vacant land can be a fantastic addition to your real estate investment portfolio.
Before you buy the land, though, be sure to do your research. A real estate investment software like PropStream can help you find information such as estimated land values, equity, growth rates, and more. By doing your due diligence, you can determine if investing in vacant land is the right strategy for you.
