Buying Land for Investment

"Buy Land, They've Stopped Making It" - Mark Twain

If you have been on the fence about purchasing land in Kansas as an investment tool then read on.

We live in an era where the world population is bursting. In many countries the people are concentrated into one geographical space...and land is a prime commodity. In this series of posts we're going to explore all aspects of land investment so that you will have some knowledge, insight & ability to pick potentially winning land investments.

You may not know much about land investing - in fact you may not even be aware that it's possible to purchase actual land that has an excellent prospect of being developed but it is entirely possible even in Kansas.

Remember that investment is not an exact science. On many occasions it's the overlooked land investments that the "average investor" doesn't know about that give the most sensational returns.

If you live in the United States then chances are that you will have seen a reasonable amount of land in your area being developed into residential estates, shops, malls, big box stores (like Walmart) and other types of development including apartments and houses. It's no longer true that the individual investor is not able to participate in the sometimes staggering profits that are to be had by purchasing land to be sold for development.

Land investing is a strategy where the investor buys carefully researched undeveloped land that has an excellent chance of being purchased for the purposes of building houses or other types of commercial property.

So...WHY INVEST IN LAND?

There are several benefits to investing in land....

• Land worldwide on average has appreciated in value by over 900% over the past 20 years.
  
• This means that land as an investment has given a higher return to investors than even traditional real estate (which has returned 300% over the same period according to research). Returns from land investments have also beaten stock market gains during the same period.
  
• Land as an investment is only going to become more valuable over the next decade and beyond. In many developing countries there is a severe housing shortage and land that can be developed for this purpose can expect to see some very handsome gains.
  
• Unlike real-estate, land investment is not a hands-on investment. Real estate investment can be highly rewarding of course, but there can be several time consuming administrative responsibilities such as ensuring that the property is populated with tenants, finding competitive mortgages, keeping abreast with legal commitments, checking the property and much more. Land investment by contrast is far less involved and a rather off-hands investment.
  
• It's possible to invest in land with far less money than is required for real estate development. You can buy smaller plots of land (sometimes as part of a larger consortium) from as little as $5,000 in some cases. Sometimes this is technique known as "Land Banking" and we'll discuss it further in another post.
  
• Usually, there are no "ongoing" costs associated with land purchases other than taxes. With real estate, it's obviously important to set funds aside for such possibilities as repairs & maintenance and vacanies. With land investment, the only costs are the purchase of land and the taxes. Very seldom is there any appreciable mainteance costs unless the property is in a pre-development state and needs mowing. This can be done by a contractor and on large tracts it can usually just be done a few times to keep it at an acceptable growth level. The cost of this is usually minimial compared to the holding costs of other types of buildings like apartments or commerical business buildings.
• Employing a good strategy to identify a potentially winning investment is to be aware of economic & political developments and invest in places that are likely to benefit greatly from these developments. Carefully researched land investment in places such as Kansas can provide you with a long term portfolio of appreciating land.