Is Buying Land a Good Investment?
I believe that buying land is still a worthwhile investment, but a long-term one.
If ever you’re thinking of selling it for a profit, it is not for the buyer who is looking to flip it in an instant and make a quick buck. Especially with such poor market conditions currently, being in the driver’s seat as the seller can be quite tough. If you are an investor who is looking to sit on it for years to come, and just wait for someone to pay the right price, how long will it take to get that perfect figure? Couldn’t the funds have been put to better use in mutual funds, stocks, bonds or rental properties? There is always inherent risk.
Land is speculative. You are buying it in the hopes that the value will go up. It might or it might not. If you bought your land back in the 1970’s you would definitely be of the opinion today that land is a great investment. However, if you bought it in 2000 with the hopes of selling it in 2010, you would have been in for a rude awakening, with it now worth a fraction of what you originally paid.
If you are a developer looking to cash in on a reasonably priced plot that you can chop up and either sell as separate lots, or house & land packages, you certainly stand to make a profit if you crunch the numbers just right. You must be reminded however of the costs to develop the land such as planning application fees, land surveyor fees, water installation, road construction and annual taxes. For it to be a viable project, the development must be tailored to what the market wants, so that sales can be realized in a timely fashion, resulting in a quick return on investment.
For the parents who want to give their children a head start in life it is a solid investment. Land doesn’t wear out, it doesn’t depreciate, nor does it fall apart nor get stolen. Ideal as a nest egg to pass on either as a gift or inheritance, etching one’s legacy.
If you’re looking to have the piece of mind of owning your home or commercial property, it makes sense to acquire a plot at a good deal first, then build cost effectively. If the process is undertaken sensibly, a raw plot can convert into a gem of an opportunity, appreciating in value over time.
The reality is that when you buy land, you buy a piece of dirt. Your intended use will determine its worth. Once you realize that you earn no interest or dividends for it, yet still have to pay taxes on it and clear it every year, you will think wisely about its intended purpose.
Here’s the clincher though. If land wasn’t valuable, why would countries go to war over it? Why can residential boundary disputes become violent? It’s obviously worth something. As an investment opportunity it remains a gamble but isn’t there inherent risk in most aspects of life? It boils down to “Buy during the bust, sell during the boom.” Timing is everything. While the real estate market may go up and down it has never declined over time.
By Cherita O’dell