When you have money to invest, buying land is a tempting prospect. After all, people will always need land for a range of purposes, and it can often increase in value, especially in desirable areas. But is buying land a good investment for you? Here are some points to take into consideration before you hand over your money.
There are many different types of land
All land may just look the same to your eyes, but there are many different types, some of which are better investments than others.
Some listings you may see for sale include:
- Agricultural land
- Brownfield land
- Greenfield land
- Residential land
Which type makes a good investment? That entirely depends on the location and the demand for it. In popular residential areas, land for housing is often highly in demand, while in other areas, land that can be used for commercial properties or farming will give you the best return. Land often sells at a higher price if it has permission for a development, so consider getting planning permission on your land even if you don’t plan to use it.
Land and anything on it needs to be surveyed
The process for buying a land is similar to buying a house. While the land you’re interested in might not have much on it, you’ll need to get it inspected to check for risks like flooding. You should also get a storage tank survey or inspection of any outbuildings, as these are all important elements of the purchase. Make sure you get expert advice to protect your money.
Make a financial plan
Investing in land isn’t as easy as buying it, waiting a while, then selling it on. It’s important to think about the short and long-term plan. How much will you invest? What kind of ROI are you looking for? Even if you’ve previously invested in flipping properties, the process with land can be quite different, as finding buyers can be more complex. You’re usually dealing with developers and big businesses rather than individuals, so while you can make profits, they can take longer.
Financial advice should be sought
Buying land is usually not a small investment, so you should make sure you find a financial advisor who specialises in these sorts of transactions. Financial advisors have to go through rigorous training and be certified, so they are a good source of impartial advice.
You should also remember the golden rule of investments; to not put all your eggs in one basket. This helps you mitigate the risk and means you can take on different investments and diversify. Don’t be afraid to shop around too and lot for the best deal.
Most parcels of land are large, so will take a big initial investment. This is why it’s so important to protect yourself and make sure you know exactly what you’re buying and whether it’s going to make you money. But with a scarcity of land in many areas, it may well work as a good investment if you can get the right deal.