Investing in vacant land is not rocket science. It is not difficult and you do not need to be a millionaire to get started. However, investing in vacant land is not for everyone. Some people are just not interested in dirt. They prefer to invest in gold or other businesses. But, with the right tools, information, and knowledge, raw land can take you from land to land for pay.
Raw land is considered undeveloped land, acres, lots, and properties. Despite the “doom and gloom” regarding the real estate market, raw land is a great investment right now because most properties are undervalued. And what better way to reallocate those underperforming assets in your portfolio than in real estate?
So where do you start if you want to invest in raw land? First of all, you need to do some research. The vast majority of people don’t even take the time to learn how the land business works. They simply take the advice of a friend or family member (someone who has probably never invested in land) that investing in land is “risky” or “not working”, and they keep looking for some other way to get rich quick.
The best thing about investing in raw land is the benefit of control. You are in control of what happens to your money.
To fully understand that benefit of control, let’s first look at a situation where you have no control, such as the world of mutual funds. You invest your money by giving it to someone else who invests it for you. Where do they put it? They put it in companies over which they have no control. You are making a good assumption that the company knows what it is doing. But then Enron or Bear Stearns happens, and you lose. Sometimes you lose everything.
The land business is different. In the corporate world, you run into trouble when you make an investment decision based on some knowledge about what is happening with the company. They call it insider trading. It’s what sent Martha Steward to jail.
But, in the land business, you must make your investment decisions based on an understanding of what is happening with the land. Or what will happen to the earth.
Buying undeveloped land is a completely different experience than buying a lot that already has a home on it. If you are considering investing in raw land, you should have access to knowledge that will help you quickly and efficiently separate winning investments from losing ones.
There are three key elements to know before buying raw soil. You make your decisions based on:
1. Access: How accessible is the property? How easy is it to get down to earth?
Where are the roads?
2. Utilities: The most basic thing you need to know is whether there is a proven source of water on the property. Also, is there electricity? What about wastewater?
3. Growth: What is the projection of the area where the earth resides? What are the population and economic development forecasts? Is the area growing, will it continue and for how long?
Another important element that you need to be successful is in your connections. The more people you meet in this business, the more opportunities you have. (Opportunities that most other investors will never know exist.) How do you find out about all this?
The beauty is that this is not insider information, although you do need to know where to look. Much of it is public record. Information is also available through the media, government websites, regulatory publications, or other places that can be a bit difficult to find. But, with a little effort and knowing how, you can find them.
Many fortunes have been made from buying undeveloped land by investors who understood the concept of buying land and holding it until it appreciates. So an investment that is under your control, appreciates over time, and diversifies your portfolio is a winning combination. It may be land, but raw land can definitely lead you to pay for land.
