Vacant Land Investing – What You Need to Know to Turn Dirt Into Pay Dirt
Raw land is considered undeveloped land, acreage, lots and
properties. Despite the “doom and gloom” regarding the real estate
market, raw land is a great investment right now because most properties
are undervalued. And, what better way to reallocate those
underperforming assets in your portfolio than in real estate?
So where do you start if you want to invest in raw land? First off, you need to do some research. The vast majority of the people out there never even take the time to learn how the land business works. They just take advice from a friend or relative (someone who’s probably never even invested in land) that land investing is “risky” or it “doesn’t work”, and they keep hunting for some other way to get rich quick.
The best thing about investing in raw land is the benefit of control. You have control of what happens to your money.
To fully understand that benefit of control, let’s first look at a situation where you don’t have control, such as the world of mutual funds. You invest your money by handing it over to someone else who invests it for you. Where do they put it? They put it into companies over which they have no control. You are taking an educated guess that the company knows what they’re doing. But then Enron happens or Bear Stearns, and you lose. Sometimes, you lose it all.
The land business is different. In the corporate world, you get in trouble when you make an investment decision based on certain knowledge about what’s happening with the company. They call it insider trading. It’s what sent Martha Steward to the slammer.
But, in the land business, you must make your investment decisions based on knowledge about what’s happening with the land. Or what’s going to happen with the land.
Buying undeveloped land is an entirely different experience than buying a lot with a house already on it. If you are considering investing in raw land, you must have access to the knowledge that will help you quickly and efficiently separate the winning investments from the losing ones.
There are three key items to know before buying raw land. You make your decisions based on:
1. Access: How accessible is the property? How easy is it to get to the land?
Where are the roads?
2. Utilities: The most basic thing you need to know is whether there is a proven source of water on the property. Also, is there electric? What about wastewater?
3. Growth: What is the area projection where the land resides? What are the population and economic development forecasts? Is the area growing, will it continue and for how long?
Another important item you need to be successful is found in your connections. The more people you know in this business, the more opportunities you’ll have. (Opportunities that most other investors will never know exist.) How do you find out about all of this?
The beauty is that this is not inside information, although you do have to know where to look. Much of it is public record. Information is also available through the media, on government websites, in regulatory publications, or other places that may be a bit tricky to find. But, with a little effort and know how, you can find them.
Many fortunes have been made in the purchasing of undeveloped land by investors who understood the concept of buying land and holding it until it appreciates. So, an investment that is under your control, appreciates over time and diversifies your portfolio is a wining combination. It may be dirt, but raw land can definitely lead you to pay dirt.
So where do you start if you want to invest in raw land? First off, you need to do some research. The vast majority of the people out there never even take the time to learn how the land business works. They just take advice from a friend or relative (someone who’s probably never even invested in land) that land investing is “risky” or it “doesn’t work”, and they keep hunting for some other way to get rich quick.
The best thing about investing in raw land is the benefit of control. You have control of what happens to your money.
To fully understand that benefit of control, let’s first look at a situation where you don’t have control, such as the world of mutual funds. You invest your money by handing it over to someone else who invests it for you. Where do they put it? They put it into companies over which they have no control. You are taking an educated guess that the company knows what they’re doing. But then Enron happens or Bear Stearns, and you lose. Sometimes, you lose it all.
The land business is different. In the corporate world, you get in trouble when you make an investment decision based on certain knowledge about what’s happening with the company. They call it insider trading. It’s what sent Martha Steward to the slammer.
But, in the land business, you must make your investment decisions based on knowledge about what’s happening with the land. Or what’s going to happen with the land.
Buying undeveloped land is an entirely different experience than buying a lot with a house already on it. If you are considering investing in raw land, you must have access to the knowledge that will help you quickly and efficiently separate the winning investments from the losing ones.
There are three key items to know before buying raw land. You make your decisions based on:
1. Access: How accessible is the property? How easy is it to get to the land?
Where are the roads?
2. Utilities: The most basic thing you need to know is whether there is a proven source of water on the property. Also, is there electric? What about wastewater?
3. Growth: What is the area projection where the land resides? What are the population and economic development forecasts? Is the area growing, will it continue and for how long?
Another important item you need to be successful is found in your connections. The more people you know in this business, the more opportunities you’ll have. (Opportunities that most other investors will never know exist.) How do you find out about all of this?
The beauty is that this is not inside information, although you do have to know where to look. Much of it is public record. Information is also available through the media, on government websites, in regulatory publications, or other places that may be a bit tricky to find. But, with a little effort and know how, you can find them.
Many fortunes have been made in the purchasing of undeveloped land by investors who understood the concept of buying land and holding it until it appreciates. So, an investment that is under your control, appreciates over time and diversifies your portfolio is a wining combination. It may be dirt, but raw land can definitely lead you to pay dirt.
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