Investing In Land – The Potential Of Profits In Raw Land

Uncertainties in the stock market have made many people turn towards investing in land. The thought of buying land seems quite exciting, and many people have made their fortunes in land investing. The high returns in dealing with land involve a higher risk factor, especially if you are new to these deals, and lack experience. 

The Types Of Land

Land investing involves investing in different types of lands, each clearly distinct from the other. The plotted land is sold for homes, and is quite different from raw land. Investing in a building lot, which has been prepared and zoned for buildings, is quite different from raw land, and consequently quite expensive. 

Planned and zoned lots come with what is generally known as the six basic amenities, or services. These are:

• The water systems 
• The sewer systems
• Paved roads
• Storm drainage system 
• Garbage collection 
• Electricity

Depending on the area where the building is coming up, certain building lots may be approved without all the above mentioned basic services. Local zoning in rural areas may allow a septic system to be installed in place of a sewer system, and some alternative arrangement in place of a public water provider, such as wells. Local zoning in such areas may not require paved roads, or garbage collection. 

Raw Land Potential

As speculative investment, investing in land that has not yet been developed has is own up side. For one, the raw land is usually less expensive. You should have the talent to recognize the path of progress, as you are buying raw land at very low prices, to sell it at a profit. At times, hesitating to invest in undeveloped land may lead to missed opportunities, as the prices may rise, in the meanwhile. 

You need to be realistic about the earning potential of investing in land that is yet to be developed. You should have the capacity and willingness to invest your money for many years, without expecting to generate any income. Of course, most speculators in land investing look to generate the largest possible profit in the shortest possible time, but it does not always work out that way.

There are times when you are able to turn a quick profit, and then there are times when you find, while investing in land, that the market has its own schedule on its path to development and progress. You must not be influenced by the hype that investing in land generates high profit, as the raw land in itself does not produce any income, and has a long holding period, before a developer turns up to develop it. 

A raw land you invest in along a major transportation corridor is sure to be developed with the growth, but the time is very uncertain. It could be next year, or not in the next decade. Investing in raw land as a speculation on future profits may make you wait out for a long period. 

Guidelines For Buying Raw Land

• Shape Of Land – Check out the shape of the land you are considering. Odd shaped parcels of land are a very poor choice as compared to square or rectangular plots. These plots increase in value must faster than odd shaped plots. Plots that are oddly shaped waste a lot of land, and may not draw buyers in future. It is easier to plan and develop plots on the traditional square and rectangle shaped lands, and they are bought and sold more rapidly. 

• Look For The Right Topography – You should invest in the land having the right topography. It is not sensible to put your money in lands that have sharp inclines and drops. Ideally, the land that is flat and dry, near tree lines and rises, are the better choices. Raw land in flood zones and terrain that is rough is not ideal for developing building lots, and there may not be a rise in prices as you might expect. The topography of the land reflects the prices, and beware if some land is available at bargain prices.

• Check The Land Beforehand – Even if you are familiar with the land, take a walk around the area before putting in an offer. If you do not have the opportunity to see the land, do not invest in it. This is essential. Who knows, your ‘great’ deal could be a useless desert land, a rocky land impossible to develop, or be right in the middle of a swamp. 

One other thing: Never buy under pressure, and have all the terms in writing.

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