When it comes to real estate investment, land is often times the overlooked step-child. There is amazing potential when investing in land that many investors never tap into! Learn more about land investment and strategy in our latest post!
There are many reasons to get into land investment. It can be an excellent way to begin investing or as a way to diversify an already robust portfolio. People from all parts of the country and in all income brackets are turning to land as a stable and limited resource. Is it right for you? Learn more below!
Guide to Land Investment in IL
Land is Low Maintenance
Owning a piece of land requires minimal oversight/management compared to owning other types of real estate. While you may be required to do some basic landscaping upkeep (depending on the type of land you own) you will most likely spend a very small amount of time managing the property versus owning improved property with structures that will require continual maintenance. You also won’t have to deal with the headaches that comes along with managing tenants either. Land is definitely one of the more passive investment strategies in real estate.
Easy to Get Started
You don’t need to have a ton of experience to get started in land. Take the time to do your homework upfront and learn the nuances of investing in land. Start by doing some market research in your area and reverse engineer some of the land in the area that has sold recently. Start looking into the common questions land buyers have such as were there utilities to the site, how long did it take to sell, how much did it sell for, what was the land zoned for, were there any environmental issues, etc.
Why Is It For Sale?
Not all land is the same. Plots of land in one neighborhood might be impacted by completely different environmental factors. Protected animals might live on your lot and not your neighbors. This can inhibit your ability to build, thus lowering the value of the land. Maybe there are oil tanks in the ground or frequent flooding problems from the creek nearby. Make sure you learn as much as possible about the lot before making a purchase!
What’s Your Strategy?
Flip It – To flip land effectively, you need to buy low and sell high. You can do this by finding unlisted deals or directly contacting the owners of lots that appear to be overgrown and forgotten. The land may have been purchased long ago, and all but forgotten about until it’s time to pay property taxes. By reaching out to owners directly, you will be able to create a relationship and possibly take unwanted real estate off their hands. When contacting any property owner, always be respectful and respect their privacy. If they are not interested in selling, never harass or bother them in hopes of doing so. You should then market the property to retail buyers. People who want to build a home on the site for themselves, etc.
Buy And Hold – Land is an excellent investment to buy and hold. It will typically appreciate over time and is very simple to maintain. Your primary expense will be property taxes which are significantly lower than taxes on a home. You can hold until land values see a considerable jump or development plans are put into place.
Lease It – Another option when owning land is to lease it to a party that has a use for it. This translates into almost 100% for you. Some interested parties might be farmers, hunters or a nearby business looking for parking. Obviously, you will need to make sure the lot is zoned for what your renter intends to use it for.