When it comes to real estate investment, land is often times the overlooked step-child. There is amazing potential when investing in land that many investors never tap into! Learn more about land investment and strategy in our latest post!
There are many reasons to get into land investment. It can be an excellent way to begin investing or as a way to diversify an already robust portfolio. People from all parts of the country and in all income brackets are turning to land as a stable and limited resource. Is it right for you? Learn more below!
Guide to Land Investment in IL
Land is Low Maintenance
There isn’t much you have to do when owning a piece of land. Maybe some landscaping so weeds don’t get out of control, but otherwise, it basically just sits there. Make sure to be aware if utilities or other expensive assessments will be enforced while you are in ownership of the land. You wouldn’t want to buy a $5,000 lot only to find you will be paying $20,000 (over time) to have water ran to it.
Easy to Get Started
Getting started in land investment doesn’t necessarily require extensive experience, but it does demand thorough preparation and research. With diligent homework, it’s possible to find viable opportunities even at relatively low costs, sometimes just a few thousand dollars. Here’s how to approach it:
Firstly, familiarize yourself with the local land market. Study recent sales to understand typical pricing and identify any seasonal trends that could affect buying and selling patterns.
Consider future demographic trends and population growth projections in the area. Areas expecting population increases often experience rising land values, presenting potential opportunities for investment.
Stay informed about any upcoming development plans or changes in zoning regulations. These factors can significantly impact the value and potential use of land. Properties located in areas earmarked for future development or rezoning could hold promising investment potential.
Evaluate whether the land is ready for immediate development or if it remains raw with no foreseeable plans nearby. Raw land might offer long-term appreciation potential but may require more patience and strategic planning.
By conducting thorough market research and staying abreast of local developments and zoning changes, aspiring land investors can identify promising opportunities and make informed decisions. Starting small with careful consideration of market conditions and future prospects can pave the way for successful land investments over time.
Why Is It For Sale?
Land parcels within the same neighborhood can vary significantly in terms of environmental factors and potential constraints. While one lot might appear ideal for development, another adjacent plot could be home to protected wildlife species, imposing restrictions on building activities and potentially decreasing the land’s overall value. Additionally, unforeseen issues such as buried oil tanks or recurrent flooding from nearby creeks can pose significant challenges and liabilities for prospective owners.
It is essential to conduct thorough due diligence and gather as much information as possible about any lot before committing to a purchase. This includes researching zoning regulations, environmental assessments, and historical land uses. Understanding these factors not only helps in assessing the feasibility of your intended use but also mitigates risks associated with unexpected costs or legal complications.
By investing time and effort into learning about the specific characteristics and potential challenges of a piece of land, buyers can make informed decisions that align with their long-term goals and financial considerations. This proactive approach ensures that the investment in land is sound and minimizes the likelihood of encountering unforeseen obstacles down the road.
What’s Your Strategy?
Flipping Land: Flipping land successfully involves a strategic approach centered on purchasing at a favorable price point and selling at a higher value. One effective tactic is to uncover hidden opportunities by identifying unlisted deals or proactively contacting owners of neglected properties. Often, these lots were acquired long ago and have since slipped into obscurity, only resurfacing when property taxes become due. By establishing respectful relationships with owners, you may have the opportunity to relieve them of unwanted real estate burdens. It’s crucial to approach owners with sensitivity to their privacy and autonomy in decision-making. If owners are not inclined to sell, it’s important to refrain from pressuring them. Once acquired, the key is to market the property effectively to retail buyers interested in developing homes or pursuing other projects.
Buy and Hold Strategy: Investing in land as a long-term strategy offers several compelling advantages. Land typically appreciates over time, making it a stable asset with relatively low maintenance requirements compared to residential properties. Property taxes are generally lower, further enhancing the attractiveness of holding onto land until values rise significantly or development opportunities materialize.
Leasing Option: Another viable strategy for land ownership involves leasing it to parties with specific needs, providing nearly pure profit for the landowner. Potential lessees might include farmers, hunters, or nearby businesses seeking additional parking or storage space. Before finalizing any lease agreement, it’s crucial to verify that the land is appropriately zoned for the intended use to avoid legal or regulatory issues in the future.
These diverse strategies offer investors various avenues to maximize the value and utility of land investments. Whether aiming for short-term gains through flipping, long-term appreciation via buy-and-hold strategies, or generating passive income through leasing, each approach can be tailored to meet specific financial goals and market conditions. Successful land investment hinges on thorough research, strategic planning, and a clear understanding of local real estate dynamics.