The best thing about a land investment is that they aren't making any more of it.
The worst thing about land is that until you do something to improve the property chances are good that you're going to need to pay real estate taxes or even a mortgage payment on real estate than does not bring in any income.
Here's how to know when owning land makes sense.
What Types Of Land Ownership Makes Sense In Today's Market? 1) Land that you're going to live on.
If you've found the perfect spot for your retirement home and you're close to retiring, right now is a great time to get a low price on that lot you've had your eye on.
Take your time and negotiate hard, because you might be the only buyer they see all year long.
2) Land for your existing business or farm to expand upon.
The best time to pickup land is when prices are low.
If you know that you're going to need to acquire land in the next two or three years, why not get it now and take advantage of a great deal.
Land Investment Deals To Avoid In Today's Market 1) Most development projects.
There is a reason that development projects come to a stop when real estate prices drop.
I've seen quite a few land investment deals that came crashing down once the market turned.
The reason for this is that the time line for a piece of land that requires development can be three to six years.
If the market turns while you're part way through your land investment project, then you could be in trouble.
2) Land investment deals that are far away from you or out of the country.
Yes, the grass does always seem greener on the other side of the fence.
To play it safe, avoid any development deal that is not within driving distance of your home town.
This may be overly conservative, but until you've done at least several deals, it's good advice to follow.
Land Investment As A Long Term Hold The ideal piece of land to own is a property that is able to cover its holding costs while waiting for the market to turn around or for the path of progress to catch up with your investment.
Some of the more common methods of creating income from your land while waiting to develop it are: 1) Holding land as a golf driving range - It doesn't cost much to set up a driving range and this is a way of improving your swing while creating the income you need to cover real estate taxes and other holding costs.
2) Longer term hold of your land investment as a mobile home park - This is typically for longer term holds because mobile homes aren't really very mobile.
The upside is that a properly run mobile home park can create some considerable income from your land investment.
3) Farming of crops or cattle on your land.
Make sure you look into your local laws as some areas allow lower taxes on land that can be temporarily zoned as agricultural.
Finally, make sure that no matter where or when you are making a land investment, you have the ability to wait for the best market conditions before you need to develop your property.