6 Reasons to Invest in Vacant Land

The idea of real estate investing tends to evoke images of buildings of one form or another, from residential homes to stores, warehouses, restaurants, and more. But renting or leasing out building space isn't the only way to go. Vacant land can be an excellent real estate investment all on its own. Let's explore a few reasons you might want to consider investing in vacant land.

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Inflation is a hot topic right now, and that's impacting the way people look at investing. Land can be an excellent hedge against inflation because regardless of what's going on with the economy, it's always in limited supply. As the saying goes, they aren't making any more.

That means you can simply buy and hold land, and it will be very unlikely to lose value but will most likely increase in value over time. You could also be more proactive in increasing its value by improving the land in some way, such as planting it in pines.

ALSO READ: Real Estate Inflation

You'll need to have any land you're interested in evaluated prior to purchasing it so that you can be sure it will be appropriate for your needs in terms of both characteristics of the land and determining what uses zoning will allow for.

If it would make good farmland, that's great news. From 2020 to 2021, the value of pastureland, farmland, and cropland increased by around 7%. That's a massive increase for a one-year period. Viable farmland could then be sold at a profit or leased out for long-term income.

The housing shortage means more homes will be needed. Of course, those homes will also need somewhere to be built. Enter vacant land. The possibilities for the right plot of land include subdividing the land and selling it to future homeowners for their site-built homes and creating a mobile home park. For the latter option, you would rent out lots to owners of mobile homes, who would be responsible for the upkeep of their homes and yards.

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Many people were working from home before the pandemic, but the work-from-home revolution is now in full force. As a result of so many people being allowed to work from wherever they choose, more people are heading for the suburbs. So, high-and-dry land just at the edges of suburbia may be well worth a look right now. As the suburbs expand at a faster rate, that land is likely to become much more desirable and valuable.

You might think you would need hundreds of thousands of dollars to spend on a large piece of land to make the investment worthwhile, but that may not be the case. If you buy a small plot of undeveloped high-and-dry land in a desirable location, you can buy and hold it to sell to someone who may want to build their dream home there. Or you can develop the land by clearing an area for a home, taking care of any other needed improvements, and then selling it right away at a profit.

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If your real estate investment includes one or more buildings, you'll be responsible for staying on top of any needed maintenance and repairs for however long you own the property. This can, of course, get quite costly. But vacant land is generally pretty low maintenance.

You can make some improvements to the land, as discussed in the previous slide, or not. But you won't have to budget for or deal with the ongoing maintenance and repair issues you will with buildings.

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If you have your eye on an interesting plot of land, just make sure the zoning situation will allow for whatever you have in mind. Then, you can jump right in with your plans or simply hold it without accruing any expenses until you see the perfect time to make a move.

If you can get a reasonably good deal on a nice plot of vacant land right now, you should consider it. And even if it doesn’t seem like that great of a bargain right now, it may still be worth evaluating the land and considering its future income potential before passing it up.

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