Investing in land: buying and selling land for profit

For hundreds of years, investing in land has been used as a vehicle to earn money, but it was often reserved for the wealthy. However, today, with the emergence of new cheaper land markets and the ability to invest in small plots of land, the market has opened up to a whole new category of investors.

It is essential in investing in land that people do not get carried away by simply buying cheap land. Obviously, a low-cost land can look attractive, however, it is important to remember that your profit will only come from selling the land and therefore there has to be some reason for the land to increase in value. An investment in cheap land is great, but if it doesn’t have to go up in price, how do you expect to make a profit?

So with investing in land, there are a few important factors to consider when looking at a parcel of land, no matter how large or small. The first to consider is obviously the price. Is the land you are investing in worth the asking price today? Second is how long you plan to hold your investment. Then you need to compare that time to a realistic projection of what your land will be worth when you intend to exit the investment. For example, if you only want to keep your land for 3 years, but projections show that the value of land in that area is unlikely to increase much over the next 5 years, then you are investing in the wrong land investment!

More importantly, you need to consider what makes your land investment so potentially profitable. Are you just buying cheap land and waiting for it to increase in value or have you done your homework? If you are investing in an area that has reason to increase in value quickly, then this is the true investment that pays big returns. Therefore, look for factors that can contribute to this. For example, is your land inaccessible right now but is that likely to change in the coming years with the introduction of a new road, rail access, or air route? Maybe it’s cheap at the moment because the area is pretty unpopulated or unattractive to tourists, but the area is starting to gain a growing amount of tourism each year and is looking to become a hot spot in the future.

Investing in land can be very simple, but the simplest thing to do is forget about the price you are paying and focus on what it will cost to sell and how realistic it will be in achieving the returns you seek from your investment in land. If you can’t see a reason why the value of the land would increase, then you are probably investing in something that will not give you the return you expected.

If your investment in land has reasons to grow in the future, be sure to pay the best possible price and consider how other costs could affect your performance. For example, a great-priced land is no longer a great-priced land if you have to add 60% to the price to cover legal costs, transfer fees, and other fees associated with investing in land.

Investing in land can be one of the easiest and most financially rewarding types of investment out there. The secret is to keep a cool head and select the correct area without looking at what makes the land good right now, but rather what makes the land look so much better in the future!