Is Buying a Land for the investment a good real estate investment?
Yes! Hardly any doubt there.
How soon can I make a profit? Trickier Answer there!
First off, I am assuming this question is to know how soon it’s going to appreciate. Or how soon one can make a profit by investing in raw land.
Challenges in Raw Land Investing
Some of the great challenges associated with a raw land real estate investment,
Where to buy –
There is an enormous opportunity in most big cities in North America. There is a continuous development going on somewhere or the other in the big cities as the city expands. However, which city, wherein the city… are relevant questions. It’s not difficult to understand if you invest in the direction the development is happening, you would make quick money. But what if you make a mistake in your judgement. A lot of insight drown out of the experience, resourcefulness and serious homework is required to know the lucrative area where one should invest.
How Big, and How much to invest –
Where it comes to raw land investment, it’s difficult to put a dollar amount for the purpose of estimation. We’ll try to understand the investment amount in the comparison terms.
Partially Developed Lots, Smaller investment in comparison – If you check the Realtor website, you would be able to easily search some lots for the single family homes or a corner lot for commercial plaza development available for sale in your city. These lots are among the partially developed land. There is a potential for further development in these lots depending on the particular zoning. These lots are opportunities for land investment. As the area develops, the value of this kind of partially developed lots also rise.
Buy undeveloped, bring it to under-developed, bigger investment – There is another kind of raw land investment opportunity, which is to buy acres on the outskirts of the cities or in developing areas. These are completely undeveloped land. One can divide that into different parcels. Municipal zoning regulations come into play. The purpose is to bring the land to under develope stage and wait further to sell it to the end user. The end user can be anyone from an individual home builder and a condo developer to a golf course developer or commercial plaza developer.
In case of buying acres, one can also keep the raw land as it is without doing any development work like as explained above. If it’s agriculture land at the time of sale, the buyer can keep doing agricultural activities by subletting it to a farmer, for the sake of maintaining it or keep it raw-as it is.
How long to keep invested – ( How soon can I make a profit )
This can be one of the most important and challenging aspects for the investor. Because investor invest to make a profit. Also, every investor has some time frame in mind to realize the profit and make a further plan. Buying a land for the investment purpose is that niche of investment strategy, which takes the investor into a very uncertain terrain. One can hardly guess and make the plan in a timely manner.
However, More the merrier! Longer you wait, the bigger is the profit margin.
Conclusion: When you think about buying a land for the investment purpose, be prepared to roam around into lots of gray areas. The Raw Land Investing certainly not for the small investor who has a limited investment horizon and a low risk-taking capacity.
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