When it comes to building up your real estate portfolio, a majority of individuals wouldn't even think about investing in raw land. It's not on their radar, and that's because it's not the norm. But, it's something to consider because investing in raw land can be extremely lucrative, as well as an easy, hands-off investment. For those of you who love to generate money passively, this might be a great path to head down.
Land as an investment opportunity is overlooked, does not received much attention in investment circles, and has gotten a negative reputation for reasons that are not accurate. For instance, some have come to the conclusion that due to the fact that absolutely nothing is happening on a plot of land, that nothing will become of it, and it’s therefore not a lucrative investment. It's a misconception and can't be further from the truth.
The Difference Between Raw Land and Developed Land
If you're new to the game, you may be asking yourself, "what is raw land?". The best way to answer this question is to describe the following two types of land investments - raw land vs developed land.
Raw Land: This type of investment is typically less expensive to purchase. This is the case because there are no improvements to the land whatsoever; it's still in its natural state. In some cases, there may be no utility poles within the area, or, paved roads. Additionally, you can typically utilize raw land for whatever purpose you see fit, just as long as your intentions meet zoning laws and other requirements.
Developed Land: Purchasing a piece of developed land would mean that the land includes improvements, or, has been developed to fit a certain need such as farming, or, becoming a residential lot, and so on. This type of land investment can be more costly since you normally pay for the developments, along with the cost of the land itself. Also, after development, it may not be suitable for certain types of uses. So, the options for use can be limited, and it can be a bit more expensive.
How Investing in Raw Land can be a Money Maker
Buying raw land can set you on the path to building wealth, grant you a long-term investment opportunity, as well as diversify your real estate portfolio. Plus, this will allow you to step outside the box and become a well-rounded investor. Let's dive in and check out these three reasons why raw land is an excellent real estate investment strategy.
1. Land is an Unrecognized Limited Resource
There is only a limited amount of land on this earth, but, there is a multitude of developers. Areas that were once barren are now housing tracks and shopping malls. This is one reason that raw land is such a great long-term investment. Eventually, your piece of property may be in the path of a development plan. This is when buyers start knocking on your door with big offers because they need your land! Furthermore, with raw land being a scarce resource, it holds its value and increases, even when market conditions are not so good. In the end, as more and more land is being used up, undeveloped land will be in even higher demand.
2. It's a Fantastic Long-Term Real Estate Investment
If you're looking for a profitable long-term investment strategy, or, something to boost your retirement fund, then you may want to consider raw land as a real estate investment. Land investments have very low upkeep costs - you won't have mortgage costs, taxes are typically low, and there are no utilities to worry about. Basically, you just let your raw land investment increase in value as the years pass by. So, it's a hands-off, passive way to make a profit and increase your net worth. If you’re not interested in long-term investments, and flipping land is more your style, take a look at this outstanding land flipping course. You can hear more about this course and the program surrounding it by listening to our podcast, Jack Bosch and his amazing land profit generator.
3. Subdivide Your Lot to Multiply Your Revenue Steams
Imagine the possibility of dividing the land you own into multiple lots and therefore receive more than one income stream. This would be possible if you were to lease them individually, or, sell each parcel of land separately. The bottom line is, more lots equal more money, and this is possible when you invest in raw land. In addition to this, smaller lot sizes may be more marketable and sell faster than a large parcel of land. Furthermore, this could also open up the opportunity of saving a section of the land for yourself, to use, or, to keep for an extended amount of time so that its value increases. Check out this podcast message on buying and leasing raw land; it will give you a general overview of the process.
The Benefits of Buying Raw Land Make it an Excellent Real Estate Investment
As you can see, it's a wise financial decision to diversify your portfolio to include land. Additionally, it would be to your advantage to conduct further research on all the benefits of buying raw land, along with the best locations to invest. But, before you dive into purchasing your first parcel of land, you may want to ensure you maximize your financial gain by setting up a legal entity to hold your investment.
Purchasing Raw Land is a low-risk real estate investment that will be sure to bring you financial gain. We hope our article has provided you with the insight needed to realize what a great investment land really is. Whether you’re interested in raw land, or, rental properties, schedule a quick call with Morris Invest so we can assist you along the way.