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Real estate investors typically gravitate toward built properties – apartment complexes, retail outlets, medical facilities, and other traditional “money makers.” However, investing in raw or undeveloped land is something that can earn just as much and provide you with some unique benefits that you can’t get when managing an entire property. Even the passive investor can benefit uniquely from raw land investments, which is why Legacy Commercial Group is always scoping them out in promising developmental areas.
There is often the assumption among commercial real estate investors that vacant land is a lesser investment to built real estate because it is one of three things:
Unable to produce rental income
Unable to forcibly appreciate through value-adds on a property (without major construction)
Simply a boring, long-term term investment
However, those who have lost tremendously in the stock market or are currently handling problem tenants may argue otherwise. A vacant land property is just as viable as a passive income investment as a built real estate investment and comes with fewer headaches and uncertainties than other asset classes.
Benefits of Land as an Investment
Even if a raw land investment isn’t as glamorous as buying a built property, there are some unique advantages that can make it more attractive over time.
Appreciation potential
Generally speaking, the land will appreciate in value if you’ve done due diligence and choose land that serves its location and is in an up-and-coming area. As urban centers creep outward, land in suburban and rural communities will appreciate, even if they are not “hot ticket” items right now. In five to ten years, you could make substantial profits and enjoy passive income from leasing in the meantime. Of course, this is all if you don’t decide to develop it, which can provide even greater earning and appreciation potential in the meantime.
Raw land is “hands-off”
Raw land doesn’t come with maintenance issues, rental rate fluctuations, problem tenants, or other headaches associated with built property. However, costs for facility care, tenant services, and property management will add up over time, cutting your bottom line. Vacant land does not need regular maintenance until development begins and can still earn from leasing. In rural communities, you can use your land for farm leases or recreation, earning passive income and paying for your loan.
Raw land is a blank slate
Raw land doesn’t deteriorate over time, which means you can begin development whenever you choose. While the development of raw land is riskier than purchasing built real estate – as you have no prior history of cash flow or rental success in your area – you can tailor the development to current market trends and think ahead of the curve.
Legacy Commercial Group offers raw land for purchase and lease in some of the U.S.’s top rising real estate markets. If you’re ready to take the leap and invest with us, contact your Legacy team today to learn more.