Top 5 Reasons to Invest in Raw Land in 2022
No doubt about the well-known fact that the best way to save money is to invest it. However, choosing the best platform to invest your money in remains a big step that needs a carefully thought decision. However, talks about bitcoin, the stock market, Robinhood, and even NFT seem to be on everyone’s lips.
But then, everyone seems to forget that investing in land is a step that has the potential to become lucrative. Also, it gives you a good start. It is also the oldest form of investment and is very stable and is not affected by any volatile market as in stocks and commodities.
Naturally, habitable land is in limited short supply and there can never be too much of it, due to the large ever-increasing global population which makes the availability of land low. In other words, a profitable investment platform.
To achieve success in land investment, you should ensure you employ a high level of due diligence, discipline, and conservative evaluation principles.
Meaning of Raw Land
One of the most exciting land types you can find is raw land. Raw land simply refers to land that has been unprepared, untouched, or undeveloped. The fact that it has not been touched or developed before does not keep it at any advantage rather makes it a more preferred type of land for investors with the opportunities it offers.
Should You Invest In Raw Land?
Before you say a yes, or no, you need to first identify what you want out of your real estate investment. Therefore, you need to bear in mind that investing in land is an action that needs a long-term proposition to deliver the desired results. Also, you would need a more patient, and far-sighted attitude to follow up on your land investment. For investing in raw land, you would need 2x of what we have just explained.
One benefit of investing in raw land is having the ability to be creatively imaginative and build whatever your mind can conceive. It could be a hotel, parking lot, hospital, etc. If you do it correctly (investing in raw land) to cater to the current & foreseeable future when you are sure to experience stunning profits from your real estate investment.
What is Land Appreciation?
Land appreciation simply means an increase in the value of land over time. This is a result of market inflation, and development in the area the land is located.
Initially, we mentioned that land is in limited supply. Raw land is even more limited making it high in demand. The more areas are being developed, the less raw land becomes available.
The point is that raw land is likely to appreciate greatly in the future, making it a very juicy asset you should consider. Yet this won’t stop anytime soon because as the global population continues to be on the rise, people will surely need raw lands to build homes, data centers, shopping malls, and other things we need for our lifestyles.
Financing Time Frames
One of the best things about land investment is that financing time frames present you with several opportunities.
The extent of time to which a lender can allow you to pay a loan greatly has to do with the land’s use and location. Lenders usually prefer to lend where the land has some level of intrinsic value. This is the kind of land that the lender will be able to take out some cash flow from, in case you default on the loan, they will be able to get the rest of the debt from the land.
Bear in mind that lenders are risk-averse, and if you bring up land with very few risks, you can still negotiate favorable terms with them.
However, paying off a loan comes with a limit to the length of time. If it is raw land then you have a shorter time because raw land is not easily converted to cash flow than other land types and lenders don’t like to wait indefinitely for a return on investment.
This shows the risk of the investment, and you should plan for 10 years or more lending periods.
Top 5 Reasons to Invest in Raw Land
- Peace of mind.
- The land is a property you can own as a long-term investment at a low cost.
- Low competition.
- It is a hands-off investment.
- You can buy and sell off land easily.
Peace of Mind: Land is a tangible asset. One you can buy and keep for a long time without even thinking about it. No robbers are trying to break in, there’s no fluctuating market, and it doesn’t depreciate.
Low-cost long-term investment: With vacant land, you can buy at an inexpensive price and hold for a long term yet still sell at a higher price according to the appreciated value.
Low Competition: With investing in vacant land, you have lesser or no competition at all. Most real estate investors have their eyes on properties like houses, hotels, and other buildings. But with investing in raw land, you don’t have a lot of people to deal with. You don’t have to worry about losing a good deal. With this, good deals come often and you always have opportunities to get them.
Hands-off Investment: Once you buy land, it behaves itself and nothing happens. No problem tenants, no changing of toilets, leaking roof, etc. You don’t even have to worry about upgrading the property, or how to construct one thing or the other. It just stays there appreciating and waiting for you to do what you want.
You can buy and sell off land easily: Since raw lands are mostly situated away from the owners, it’s easy for their owners to sell with no emotional attachment. Plus you will get a good price while buying since the sellers are ready and motivated to sell.
Land investment is one of the best investments you should leverage if you are considering real estate. It has loads of benefits like yielding very high returns if you buy right. Should you also decide to build on this instead of selling, it’s up to you.
The most important thing to consider when buying raw land is if the land is in a good location. Is it a good land to build on? If yes, you are good to go.
