Raw Land Investing: Pros Vs. Cons

Investing in raw land is an area of real-estate investing that fascinates many. Something about purchasing vacant property brings visions of striking oil and unseen riches. But is raw land a good investment?.... Raw land is unarguably the most complex asset class in real-estate, especially when it comes to development purposes. Realize that raw land varies GREATLY geographically and by local laws. It's value is greatly determined by what can be built on it. Consult with a local expert in your area before making any purchases. ▼ More In-Depth Info On My Blog! ▼ http://www.cheaphouseswilmington.com/investing-raw-land-pro-vs-cons/ PROS: Raw land is cheap! The barrier to entry for raw land is greatly reduced by it's low price tag. I've seen perfectly fine raw land under $1000 in rural areas. Will developers be fighting hand over foot for your rural property? No. BUT it still has a good chance of appreciating in the long run and this is what most investors want. 2. No hassle Raw land is not sexy and it literally just sits. It theoretically can sit forever since it cannot be destroyed and with no maintenance at that. No disgruntled tenants threatening to slash your tires. No clogged drains. No leases. Depending on the location, you probably don't even have to mow it. 3. Difficult to price The marketplace for raw land is INCREDIBLY different from traditional real estate assets. There are not that many buyers, fewer comparable properties, and the concept of what deems vacant land "desirable" is broadly interpreted. If you are a good negotiator, deals will be abound. Buyers for raw land are few and far between. Being a desperate seller in the land market is not someplace you want to be! CONS: No Cash-flow (This is a BIG one) From a traditional real-estate investing perspective, raw land does not cash flow! Any experienced investor will tell you, the majority of money in real-estate investing is in the the cash-flow. I urge anyone considering investing in raw land to take this into consideration. With no cash-flow, raw land also does not allow for amortization (No renters, so no one is paying a mortgage). This wipes out a massive profit potential when it comes to investing and this is why I shy away from investing. 2. Incredibly complex Laws, geography, wetlands, and endangered salamanders. What do these all have in common? These all could drastically effect the value of raw land. Whether in the past, present, or future, there are many threats to the value of anything you plan to develop. As the old saying goes "If you can't sell it, don't buy it. 3. Very speculative The value of the land can be tied to forces that are out of your control. In my city, there's almost a "gold rush" for vacant land as developers and builders fight for every last nook and cranny in a rapidly dwindling land supply. I have no idea whether land prices will continue to increase and I feel uncomfortable as an agent helping people buy vacant land. Essentially, you can be at the mercy of a roller coaster market and you never want to be the other individual that bought at the wrong time. ▼ Follow Me On Social Media! ▼ Twitter: https://www.twitter.com/cheaphouseswilm Instagram: https://www.instagram.com/teddysmithnc/ Pinterest: https://www.pinterest.com/teddysmithnc/

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