All investment strategies have their advantages and disadvantages. Fortunes have been made investing in land, but money can be lost if the investor is forced to sell under pressure at the wrong time.

Following are some of the reasons given by investors for acquiring land:

• To develop the land at some point in the immediate future for residential, commercial, or industrial purposes;
• To develop the land at some point in the distant future;
• To pass the land on to future generations of the investor's family;
• To hold the land as a long term investment with the intention of selling or exchanging it in the future at a profit;
• To create a hedge against inflation and the devaluation of our currency;
• To create a hedge against soaring state and national debt;
• Recognition of the fact that the supply of land is limited. No more land is being made and it cannot be printed by the government;
• The profit made on land is taxed at the lower capital gains tax rate and any profit can be deferred by utilizing a 1031 tax deferred exchange;
• It can be utilized to build a financial statement as it increases in value over time;
• It can be easily added to a self-directed IRA or 401K retirement plan account;
• It can provide a private retreat for its owners;
• It can be held as open space to protect the environment in perpetuity;
• It presents no tenant problems, maintenance is low or non-existent, and there are no homeowner association restrictions; and
• To establish locations for commercial signs;
• To establish locations for the erection of Christian crosses;
• Through your legacy it can help your family, including future generations, develop financial security and independence.

 

Some land bankers buy relatively small adjacent parcels over time with the intention of creating value by assembling them into a larger, more useful development site. This is referred to as creating plottage value. The land in Anaheim, California where Disneyland is located, was acquired very discreetly by a group of land bankers working for the Disney Corporation. Large home builders also use this technique to acquire land.

Other land bankers acquire large parcels of undeveloped land and then subdivide it into residential and commercial lots and parcels creating an attractive environment and far higher value.

Many investors, including Bob Hope and Donald Trump have earned fortunes from buying and holding land until the market justified selling the properties for huge profits.

One of the best and most efficient ways to hold land for long-term development is to utilize it as a trailer park and/or recreational vehicle park and then convert the use at a later date when the area is more developed. See: Glossary of Manufactured Home Terms.

 

Benefits of Planting Trees

Community Gardens - Collective Gardens

Vacant Land Liability Insurance

Campsite or Campground Investments

1031 Tax Deferred Exchanges

 

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