Denver Furnished Apartments
Real estate can be a great investment. It was mostly thanks to appreciation in houses bought for just a few thousand dollars and later sold for hundreds of thousands that the Greatest Generation could afford their great retirements; and some of the world’s biggest fortunes have been built on owning real estate.
This can be true in spades for rural land. We have already told the story of one family who enjoyed their rural land for twenty-five years and then sold it off for millions of dollars; and their happy story is repeated daily.
But not all rural land will appreciate. Some may even decline in value, so if you hope to invest in rural land, you can’t settle for just any old parcel because you love the trees and views. Beyond checking out its access and zoning and making sure that it is free from pollution, you’ve got to be a savvy strategic investor. Here are some thoughts to be applied when you find a rural parcel that seems ripe for investment: Denver Furnished Apartment
• Think investment! Don’t rely on future luck to make you money, but instead always begin with the end in mind.
• Buy in advance of likely future growth. Land just outside the developing ring of a growing city is your best investment, while land in the boonies of a state that people are fleeing for happier climes might see no appreciation at all.
• Look at road patterns. The best land investments are those so close to present or future major roads that the land can be easily reached, but still far enough away that they suffer little in the way of freeway noise. A visit to the planning office of a town or city where you hope to buy your land can yield a wealth of information about future changes in roads and infrastructure.
• Look for the right kinds of water. In most states, surface water is the biggest real estate amenity, so bordering on or containing a clean pond or lake can increase a parcel’s value. Abundant pure subsurface water that can be tapped with reasonable ease is another positive factor. But wetlands and swamps can make the land useless, so make sure that whatever is not a real body of water is almost all true upland.
• Favor road frontage. In most states, frontage on developed roads can be broken into lots and sold easily, while interior land cannot be developed without first putting in roads and infrastructure. Limited road frontage is not a barrier to buying if everything else about the land is a “go”; but in general, the more road frontage, the better.
• Have a holding-period use planned for your land. Unlike stocks or bank accounts, rural land is a financial drain, so it is foolish to buy even a likely-looking parcel unless you can use it while it is appreciating. Living or vacationing on the land is best; but if you can’t do that, then see if you can maybe lease it for grazing or hunting. Paying taxes and interest on unused land that appreciates at ten percent per year is going to mean that your return is close to zero.
• Have an eventual economic use for the land in mind. Nobody will hold you to it, but when you begin to think seriously about buying, you ought at the same time to be thinking about selling. Will this land eventually be platted for housing? Is it close enough to freeways for multi-family housing, or is it better suited to becoming ranchettes? Does it have commercial possibilities? Are there nearby parcels that might later be combined with it to increase the whole area’s value? For nearly all rural land, the ultimate best use is going to be some form of housing, but that doesn’t mean that you should immediately assume that is going to be your only option.
• Have a general holding period in mind. If your notion is to retire to your land and leave it only feet-first with a lily, that’s fine; that itself is a holding period. But too often, people hold onto land and pay interest and taxes on it year after year without any clear idea of when they will reap whatever is going to be its value.
• Buy it right. The old saying that you make your money when you buy is especially true for rural land. Study nearby values carefully, and try to pay as little as you can in relation to whatever you expect to make. So if you find a parcel with extraordinary investment possibilities and with very little risk, then you will be willing to pay more; but if the land is more speculative, then negotiate hard and be prepared to walk away. The fact that the land will give you little or no income makes buying it right a real imperative.
• Remember your Section 1031 option. This is such an important factor in the investment lives of rural landowners that we will be treating it separately, but for now just remember that real estate investments can be exchanged for other real estate investments without the need to recognize a capital gain. This means that if you own rural land that has appreciated mightily, you can sell it and buy other land or rental properties, and whatever you would have paid in capital gains tax can be kept and reinvested. The rules are strict, so if this idea interests you, then consult a knowledgeable attorney.
Rural land can be a great investment. If you do it right, you ought to be able to buy land that makes your heart beat faster, live on it for a decade or two, and then sell it for maybe enough to let you happily retire on another rural parcel, on the future outer ring of some retirement haven.
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