Should You Invest in Land?
By Sadiya Anjum
Consider buying a plot of land for investment purposes just as you would with other low-risk investments such as bonds, mutual funds, etc. Earlier land was bought only by the big players - developers, public bodies and other “rich” people. Today, with plots of land being advertised openly especially on the internet, it gives the common man a chance at high returns on his investment.
Buying land is far more different than purchasing a developed property. It is a complex purpose and it requires some professional help. If you are a rookie, it is highly recommended that you find yourself a land agent. Over the past few years, the value of land has risen steadily and it will continue to do so. With the world’s population expanding as it is, we can expect to see the value of land rise.
Not many people consider buying land as it does not offer any immediate source of income unless you utilize the land by renting it out to farmers or for any other purpose. Until you sell it, the land does not offer any income and you have to continue to pay taxes on it. But those who realize the potential a plot of land can hold, will know that you can easily expect high returns within a short period of time.
Land is usually not subjected to downside volatility and growth is generally consistent. In the worst situation, you may see a little fluctuation but the odds are against this. One can always count on steady growth in the value of land. Add to this the fact that land unlike developed properties is low maintenance. But you have to be smart when you pick a plot. The real estate golden rule becomes even more precious in the case of land: location.
Pick the wrong location and you will not see growth. Always pick a land market which is established and has seen steady growth in the past. In this case, there is always a guarantee of continuing rise in land value. Cheap prices may not get you the best deal as the value may decline further. When buying land, one has to consider further developments the area is going to witness. Take into account, the long term plan for the land’s use.
Find lands in areas where infrastructure is going to develop and improve. Check to see if planning permission is going to be granted in the area for developments. When you find a land with good prospects, buy it. Once permission is granted, prices may soar and it may be the ripe time to sell. As with every investment, you can expect risks. If permission is not granted, the land may not soar in value but it is unlikely that it will depreciate too.
Many people consider investing in land overseas. You have to watch out for countries which are developing well. Get as much information about the country before you even consider looking for land. A country which may face economical or political upheaval in the next few years is probably not the best choice. When you find a country, look for developing locations. You need to have local help to get you through the entire procedure so you can invest smartly.
Buying a land for investment purposes is a good idea. But you have to pick the right location. If at any point you want out, you can always sell the land to an interested party. Specialist land companies deal with purchasing land from investors. Remember that no other investment has the potential to give you such high yields as the plot of good old land does.
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