Investing in vacant land can be highly profitable. You can buy a property at a considerably low price and sell it years later at an excellent profit.
Land is a limited resource so as the demand goes up, your investment’s value is also likely to rise. And because there’s no structure in place, there’s little maintenance expense involved.
However, this investment type also has its own risks and downsides. Given its unique nature, it’s important to proceed with caution and do plenty of research at the onset.
How to Make a Profit from Vacant Land
- Buying and holding
Land value tends to appreciate over time. Much like stocks and bonds, you can buy land and hold on to it until you feel it’s time to sell. Potential buyers in North Florida include farmers and ranchers, as well as developers and individual homebuyers.
How long you should hold on to the land depends on your investment goals. Some experts say it’s best to have a shorter exit timeline because it’s difficult to predict how land investments will perform in the long haul. Others consider land as a long term investment – spanning around 20 to 30 years – where you can “park your cash” and sell when the value has appreciated considerably.
North Florida is known for its agricultural produce and livestock, and is a highly sought-after location for farmlands and ranches. However, you may have to invest more on the land to make it viable for agricultural uses.
The land may also be used as a site for billboards, self-storage facilities, parking, and other temporary or short-term uses.
- Prepare entitlements
If you’re targeting developers, make the property more attractive to them by getting it development-ready. Get the right entitlements, including zoning or rezoning, building or subdividing permits, utility and road approvals, and others. While you have to spend in the process, the expected increase in your property’s value can give you good returns.
It’s very important, however, to obtain the right entitlements. The wrong ones can limit the use of the land or even render it worthless.
Other Things to Consider
When investing in land, due diligence is very important. Some of the things to look into include:
- Zoning laws and environmental issues – Find out if there’s good reason why the land is vacant in the first place. Some factors, such as zoning or environmental restrictions, may be limiting its use or making it undesirable to investors. It’s best to have a firsthand look at the property, inspect its features and condition, and learn about easements, zoning laws, and other potential restrictions or obstacles to its use.
- Rights and titles – Make sure the land does not come with encumbrances and title issues, which may arise when the property has passed on through different owners or several generations within a family. Do a title search and get title insurance for protection. Look into the rights you get as the owner, as well, including development rights, mineral rights, and others.
- Future developments in the area – If you’re investing in land for development, it’s a good idea to buy in an area close to major thoroughfares or with predicted job growths in the next 20 to 30 years.
There are more factors to consider when investing in land. To help ensure you make the right decisions, get guidance from Realtors with land expertise. In the northern Florida area, Ranch Finders Southern Homes and Farms is the team to call. Get in touch with them at 352.559.0964 or at this website, or send an email to info(at)ranchfinders(dotted)com.