Considering land investment

Raw Land is land that has not been used or developed.  There are four different types of land available for purchase.  Firstly, self-build land is land that is bought for property development.  Secondly, greenbelt land may include woodland, farmland, and open fields.  The third type of land is woodland, which is also a type of greenbelt land.  Finally, agricultural land is the least popular type of land for investors.

Is investing in land a solid future investment?

Land is often referred to as a type of real property.  Real property does not depreciate. This means that land will almost always go up in value over time.  For this reason, it can be argued that investing in land is a solid future investment, and the longer land is held, the more it is likely to increase in value.

Of course, even with the most solid types of investment, there is some risk of a reduction in value.  This could happen due to economic recession, although if the land is held for long enough, its value is likely to increase again following the recession.  It could also happen if industry is booming in the town where the land is located when it is bought, but then the industry loses value and, in turn, land in that area loses value. Again, however, the value of land is likely to increase in the long-term.

The advantages and disadvantages of investing in raw land

One advantage of investing in raw land is that it is a versatile investment.  Raw land owners could choose to develop the land and make a profit, or alternatively they could simply hold on to the land for a long period of time, during which it is likely to increase in value.  This is known as land banking.   Another advantage is that raw land investment is one of the most secure types of investment, and is most likely to provide a good return.

As with any type of investment, there are some disadvantages of investing in raw land.  An uninformed and poorly researched investor could end up buying a piece of land with contaminated soil or soil quality which is not right for building houses, or land which will not pass a percolation test and will not, therefore, be approved for development.  Another disadvantage is that to make a good return, most investors in raw land will have to hold their investment for a relatively long period of time.

Compare investing in raw land and property investment

Raw land offers the potential for flexible long-term investment, however property investment offers the opportunity to earn revenue while the property is held, and not just when it is sold or developed.  Investors who own property, for example, can rent it out while they own it, as a steady form of income.  There is plenty of property for sale in Florida that has the potential to provide both income in the form of rent, and a good profit when it is sold.

5 Responses to Considering land investment
  1. Jennifer
    September 13, 2012 | 1:05 am

    If anyone is considering land investment when buying investment property, there are many factors to consider, the first is lack of income. Since raw land does not produce income it may be difficult to get financing, thus it is crucial that any investor make an in-depth study of the surrounding area with future growth in mind. Among factors to consider is population trends, and what direction the population is growing, if there is any growth at all or a decline.
    Loved reading your content.
    Jennifer Goldblum

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