“Land investment”
By James Nsien2
http://james-nsien2.com
Land Investment has historically been the forte of large development companies, rich farmers or wealthy individuals. It can be a profitable business if proper development of land is undertaken. Land investment is referred to as a long term investment and with land prices on the rise in many parts of the world, it is said to be the safest and smartest way of investing ones money.
Capital gains can easily be realized from land when land price increases. The most striking feature of land investment is that investment takes place in a tangible asset which the investors can readily put into use. It is a branch of real estate investment which is gaining ground as major part of capital budgeting analysis. Real estate is basically defined as immovable property such as land and everything permanently attached to it like buildings. It is essentially at this juncture that land as an asset differs from real estate as it does not necessarily includes buildings and the attachments to the land.
Land is perhaps the most basic asset that we want to invest in and may include vast open tracts with no significant estate on it. The job of developing the land lies with the developer, and with proper care to include modern houses and the associated amenities, it will significantly appreciate its value. Land situated close to developed areas will cost more as opposed to those in less developed areas. Land developed for commercial purposes and those developed for building residential complexes will have different prices and tax implications, if any.
Investing in land can be profitable as there is limited supply of land and the purchaser can really sell dear if he wants to. Besides, there is the short to medium term possibility of exceptional returns, and property values can be readily increased by erecting modern world class amenities as already mentioned.
Real property as opposed to personal or movable property is characterized by the right to transfer the title to the land whereas title to personal property can be retained. The investment in real estate essentially depends on the risks associated with it, that is to say, even if the venture succeeds when the future stream of income will accrue to the investor and the alternative investment opportunities. Real estate investment or investment in land can be attractive if viewed as a business opportunity; it can generate rental income, using it as collateral to secure a loan for a business venture, to offset otherwise taxable income through cash savings on tax-deductible interest rate losses, or simply from the profits garnered from its resale.
Land investment, while may not produce instant gratification as a real estate or home purchase does, can be extremely lucrative in the long run. With environmental groups raising a hue and cry over the lack of care towards basic environmental needs, environmental issues are some of the concerns plaguing land or real estate developers or investors.
The advantages of investing in land:
• Higher profits – Annual Return on Investment (ROI
Analysis)
• Ground floor with less risk
• Superior financing terms
• Greater flexibility for maximizing value
• Simple investment management
Regardless if you are looking for a real estate property for investment purposes, or as a site for a future home; investing in land is proven to offer a safer and higher return on your investment than any other financial instrument available today. Traditional investments (stocks, bonds, etc.) over the past couple of years have seen average returns of 4-8%. In contrast, real estate and land investments have realized cash on cash returns of greater than 200%; with less risk.
Finding locations:
Drive around- Spend some time driving around areas that appeal to you. It’s likely you’ll uncover for sale signs on available property. Often, a lot owner will simply put up a sign and use no other method of marketing the property. If you have retained an agent to represent you, just pass the information along to your agent, and they will do the legwork. If you are experienced in making real estate purchases, you can contact the lot owner yourself and get the information.
Check the classifieds- Both builders and property owners use the classified section of the newspaper to advertise their offerings.
Search online- Select a good site for MLS listings. Click on Lot Search and enter the parameters of your search. Remember, these properties are listed by real estate agents who represent the seller. You will want to employ an agent that represents you. Let your agent know what lots you have seen online that look appealing. They can research the properties, and organize a “shopping trip” to look at lots of interest and within your price range.
Talk to builders- Many builders “take down” lots from a subdivision developer, planning to sell the lot with a home built on it. Most builders advertise by placing signs on their available lots. Some list their lots with a real estate agent. These lots are a “package deal”. The builder usually has little or no profit built into the lot. Their profit comes in building the home. This is a good arrangement, provided you like the builder, his pricing and his reputation. It is important to look at the entire package: the land, the builder, your home, and price when you take this path. The most beautiful lot in Austin will not compensate for a nightmarish building experience or a poorly constructed home.
James Nsien2
NCN Real Estate Investments, LLC
Originally posted 2009-05-04 16:05:30. Republished by Blog Post Promoter