Author Topic: Land as an investment  (Read 2259 times)

tomtov

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Land as an investment
« on: August 16, 2015, 10:15:52 PM »
My husband and I have built up a little bit of savings and would like to start investing it wisely. He has gotten the idea that land would be a good, reliable investment. We would not put all our saving into it in any case, but can anyone point me to resources or evidence as to whether buying land (either in the US or abroad, say Europe somewhere), makes sense as an investment? Or is totally insane, so we can decide one way or the other.

Monkey Uncle

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Re: Land as an investment
« Reply #1 on: August 17, 2015, 04:36:34 AM »
I guess it depends on what kind of land it is.  If it's agricultural land, it could be an income investment similar to rental property (i.e., you lease it out to a farmer).  If it's forest land it could produce a lump sum when the timber is ready to harvest.  Same thing with any minerals (but you have to make sure the minerals actually convey with the surface - split estates are very common).  Generally you need to know the market for such things pretty well to figure out whether the return is on par with or better than alternative investments.

If you're considering just buying and holding on the hope that the price goes up, I'd lean toward totally insane, unless you know the local market really well.  This type of speculation is akin to trying to time the stock market.  Real estate generally appreciates in line with inflation over the long term, unless something is going on with development patterns to drive up prices in a particular locality.

MaikoTsumi

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Re: Land as an investment
« Reply #2 on: August 17, 2015, 08:16:30 AM »
Land is a placeholder for value to be added to.  You either buy the land and add value to it or you hope someone else will come along and do that for you.  Land will not cash flow, money invested in land has opportunity costs in that you have a high hurdle to outperform other investments you could have been investing in, and land can less liquid.  It may take years to sell when you want to get out of it.  There are much better investments than land .

forummm

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Re: Land as an investment
« Reply #3 on: August 17, 2015, 11:42:07 AM »
Land itself is not an investment. It's speculation, but with carrying costs. So you could easily just lose money on it. If you want to invest in real estate, it should be something that generates income, like a rental property.

tomtov

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Re: Land as an investment
« Reply #4 on: August 17, 2015, 03:29:49 PM »
Thanks for the feedback, I appreciate it.

Fishindude

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Re: Land as an investment
« Reply #5 on: August 26, 2015, 07:42:01 AM »
Midwestern farm land can be a great investment.
Purchased our original farm in 1990 for $750 per acre, will easily sell for $6000 per acre now, plus it has kicked back about $8000 every year in annual income.

Buy 40 acres of bare, good farm ground @ $7000 per acre = $280,000
Cash rent for $250 per acre = $10,000 less about $2000 taxes = $8000 annual income or just shy of 3% return.   You can't get that from a CD.
It's a safe investment, likely to gradually appreciate, and can usually be sold very quickly if you need cash.

clarkfan1979

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Re: Land as an investment
« Reply #6 on: September 05, 2015, 12:53:38 PM »
If you can do something with the land to produce income then yes. If the land just sits there, then no.

Many farmers just outside of major cities retire as millionaires when urban sprawl hits their land and they sell to a developer. However, they make a living off of the land by farming it.


NoNonsenseLandlord

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Re: Land as an investment
« Reply #7 on: September 06, 2015, 10:37:54 PM »
Buy gold instead.  It will have the same return, less the land taxes.