Real estate investments are always interesting. They are so vast and have so many options to choose from. One such popular investment option is a raw land investment. Raw land investments have numerous upsides. Land investments are different from property investments since the developments do not occur on the land in question. While it is important to adhere to the local zone rules and regulations, it is equally important to understand that land is comparatively inexpensive and provides the investors with the ability to complete different kinds of development plans.
So, if you are looking to list your house for sale in San Antonio, TX, and plan to invest in raw land, you are at the right place. We have created this ultimate guide for all you need to know about raw land investing.
The major reason why raw land investment is popular is that it is highly lucrative and is an ideal option for long-term investment strategies. When you specifically look at farmlands and recreational lands, the value for these lands has dropped only once during the last seven years. This means that their values are constantly rising.
While a lot of work goes into the development of raw lands, the investment pays off once you take the proper steps for maximizing the returns. There are a lot of reasons why people choose raw land instead of developed land. This investment can be great if the cost of the land is low to take economic downturns into account. It is also an ideal investment for people who can partner with a reputed land developer.
Click here to find out what you need to know about buying land and residential lots.
What are the different types of land investments?
Various land investment options are available to you as an investor. But, it is not as simple as purchasing any plot of land that you find. Many investors take this approach and fail because they do not consider other extra factors. To find out what additional things you need to do before investing inland, it is important to know about the different types of land investments.
Once you know the types of land investments and the pros and cons of buying them, you can identify the option that works the best for you. Following are the types of land investments :
- Small farmland investment
- Row crop and livestock
- Commercial and Residential land
Small farm land investment:
When you look at a small farmland investment, it is an investment made for the use of vineyards, orchards, timber, or minerals. To make a wise decision on the investment of small farmland, you should have sufficient knowledge about the agricultural industry. While the raw crops need large plots of land, this investment will accommodate small plots of land which will make it easier to obtain finances from the lenders.
Row crop and livestock :
This type of investment is a little difficult but comes with more rewards. Firstly, the investors need to have extensive knowledge about the agricultural industry. Row crops can be anything from corn to soybeans. However, you must remember that the land in question should accommodate the planting of row crops if you want your investment to pan out.
Commercial and Residential land investment:
When we talk about commercial and residential land, this type of land is reserved and zoned for some specific purpose but is yet to be developed. This is quite a popular land investment option because the development that will occur on the land is already decided and specified. Also, it will be easier for the investors to get financing from the lenders as the lenders will be sure that the land will be developed for commercial or residential purposes.
But, thorough planning is needed before investing in commercial or residential land. For example, you must assess the surrounding real estate market before you purchase any land. If the local market in the area is on a downturn, it is wise to not purchase the land in that area.
Certain issues that you must consider
Before deciding to invest in raw land, there are some issues that you must know of and consider. For example, you will have to face certain use restrictions for the land in the place that can dictate how the land should be used. You should also keep yourself updated about the property taxes, the location of the property, and how the utilities will be introduced to the land. If you invest in raw land without considering all of these points, you may not be able to find out any issue until you have already invested.
Row crop and livestock land have certain extra responsibilities as compared to other land investment types. In certain cases, market fluctuations are quite common. It also is a high possibility that because of bad weather conditions or other external factors, the entire season of crops can be destroyed. This can lead you to lose a significant amount of money. With some pieces of land, there will be certain rules and regulations in the place that determines how you will be able to access these natural resources. Once you are aware of what you need to know, then you can be prepared for any issues that may arise.
What are the advantages of raw land investment?
According to top realtors in San Antonio when investing in raw land, the risk versus reward factors should be considered thoroughly. This means that the risks and reward factors should be taken into account and then decide whether the investment should be made or not. Your final decision should primarily depend on what your investment portfolio is centered around.
Some investors thoroughly focus on risky investment options, while others like to maintain a balanced portfolio. If the potential returns on the investment are high, then it can be worth taking the risk while investing. On the other hand, a land that can only provide you with a modest return may not be worth money if the risk is high.
A lot of factors play an important role in raw land investments. You must keep them in mind before making any investment. Some of these factors include the local housing market, mortgage rates, new housing construction in that area as well as the local economy. If the mortgage rates are high, that means the housing market will be strong. So, investing in raw land will not be risky. The primary benefits of investing in raw land are as follows –
- It is easy to maintain as compared to other developed properties.
- Raw lands come at a low cost
- They provide potential passive income
- Unlike investing in other properties, there is no competition involved in raw land investment
- To gain land is relatively simple.
- There is a lot of flexibility on what you can build on the land in the future.
Click here to know more about the pros and cons of investing in a vacant land.
Any real estate investment has its potential set of risks involved and investing in a raw land is no exception. Once you have enough knowledge, you can have the confidence to get started. But, along with that, you need an expert by your side. Real estate agent in San Antonio is here to help you out. They will guide and assist you all along the way. Get in touch with them now to unlock the profit margins from an underutilized real estate to a successful investment strategy.