Land. Whether you’re buying and selling it, parking your money in it, buying and holding for development, or just going out and sitting on something that you own, land is a great investment. Until you can invest in a wonder drug that molds your six pack as you eat brownies there is no other investment quite like it. I want to take a moment and share 10 quick reasons why land is an incredible investment.
1. Land is the only truly appreciating investment. One of my favorite quotes from Mark Twain tells us to, “buy land, they aren’t making any more of it.” Inflation eats away at savings accounts every single year. Homeowners deduct deprecation from their degenerating houses every day due to their decaying infrastructure. Stocks race to stay ahead of inflation and their own competition. Don’t get me started on crypto-currency. Even Gold, which has long been the “gold standard” (pun intended) for safe assets, fluctuates wildly with supply and demand. Land is stable. Land has use and utility and is verifiably finite. Until Elon Musk successfully puts Matt Damon on Mars and starts a colony there won’t be a dilution of the supply of land. A 600 square foot beach house on Laguna Beach isn’t worth millions of dollars because of the architecture; the land provides the value and the appreciation.
2. Land Investors don’t deal with Tenants. “, so my cat got stuck in the toilet and now the oven is on fire.” Horror stories about nightmare tenants abound in the real estate world. Everyone and their twice -removed cousin has a story about a disrespectful and filthy tenant ruining their rental property. It’s extremely challenging (and very illegal) to ruin land. Vacant farm land in Chernobyl is a diamond in the rough to the right buyer. Not worrying about tenants makes land investing a truly unique form of real estate investing
3. No repairs. Buying raw land means there are no repairs on your end. Sure you can clear, level, and develop to your heart’s content, but nobody’s 120 year old porch needs fixing on your raw piece of Colorado Mountain country. The term “deferred maintenance” rarely comes up when talking about raw land investing.
4. Buying and selling on terms. Perhaps one of the best aspects of land investing is buying and selling on terms. Owning your own piece of land for no money down and $125 a month is a reality. For the price of a used 2003 Toyota Corolla with more dead hamsters in the car than cup holders, the average person can buy multiple acres of gorgeous Colorado land. And for the seller, the ability to sell on terms enables a much larger return on investment (ROI). Land can be sold on a “land contract,” meaning the seller retains ownership of the property until the contract on terms is completed. This is possible with vacant land because it does not fall under Dodd-Frank or the SAFE Act, both of which are designed to protect homeowners from losing their primary residence due to predatory lending. Word to the wise: if you sell on terms, ensure your contract restricts the buyer from using the land in any way that would put the seller out of compliance with Dodd-Frank or the SAFE Act. For example, include a clause preventing development of any kind on the land.
5. Land appeals to all kinds of people. People will buy land for the pride of saying that “I own land in the Rockies.” They’ll buy land to hunt snakes, watch birds, or because they are subsistence or recreational hunters. They’ll buy land to have a good place to photograph engagements and maternity shoots. Doomsday and Apocalypse believers will buy land as a refuge or for bomb shelters. People buy land for timber, or to build a getaway cabin. People buy land for all types of reasons.
6. Land is a growing investment class. Over the past 20 years, land has grown as an investment class immensely. The dot com boom and bust, real estate crisis and subsequent recession, and recent political unrest all lead people to seek alternate and safer investment vehicles and land has become one of those vehicles.
7. Land is easily upgradeable. Look at my article titled “All the ways you can improve your land” for a more robust list, but land is immensely improvable. From receiving an easement to building a septic tank or negotiating power from an electric company, a number of actions can have immensely profitable and useful results for your land.
8. Land investing has a TON of educational resources. Mark Podolsky of thelandgeek.com is an immensely powerful influencer in this real estate niche and freely gives out an enormous amount of information regarding land investing. Seth Williams of REItipster.com is another big influencer. Visiting Biggerpockets.com and reading about land investing is another great resource. If you are interested in land investing there are so many opportunities for education.
9. Cheap land is very accessible. Personal account, my grandfather left the family almost 80 acres of timberland in Alabama. We had no idea what to do with it, so we just pay property taxes on it year after year. Many people are in the same boat and inherit land where they either cannot or do not want to pay taxes on their property. There is a lot of cheap land just begging to be purchased if someone is willing to look hard enough.
10. Unlimited potential. Your land can do anything. It can provide the set for a movie, the ground for a great hunt, the site for your new Air BnB cabin, the off-roading area of your dreams. Land is raw potential and it is absolutely ready to be used to whoever is bold enough to seize the opportunity.
