It must be noted that land investment does not mean investment in property. Land investment means investment in land without any construction over it. The piece of land or real estate that has certain construction or structure on it has been classified as property.
Mark Twain jokingly once said that, one should buy land, because its production has been stopped. In a literary sense the statement is hilarious, and from the point of view of economics it is a fact. Land which is one of the most important resources, is needed for the simplest purpose - human existence.
Demand and Supply Analysis of Land
Land has an inelastic and non-growing supply, and at the same time it has an infinite and ever-growing demand. In simple words, the total area of land in the world is limited. In short, higher demand and limited supply of land has escalated the land prices throughout the world.
There are several reasons such as vicinity to amenities, utilization resources, cultivable characteristics of land, or other such features tend to escalate the cost of land even more.
This is also the reason for the different price levels in the different parts of the country. The rule of thumb is the more convenient and resourceful the land, the more is demand for it and vice versa. More demand means that the price of the piece of land is going to steadily rise.
Hence, as an investment, you will need to hunt for a piece of land that has very good value projections. To do so, you will have to conduct some market research and analysis.
Locations and Features of the Land
The best pointer to the value projection of a particular piece of land is its features. When you decide to invest in land, you will have to look up and research the different features of land. First, the geographical and geological characteristics have to be observed such as is it an industrial, barren, agricultural or mountainous piece of land.
Usually the barren and mountainous piece of land would not get much of a high price projection. The second aspect is the significance of the surroundings.
For example, if the plot of land is situated on one of the main roads of the city, then the projection is magnificent, if it is situated near an industrial belt then you got a lot of returns, if it is barren and still next to or in the vicinity of an urban region, then again there is good chance that you have struck gold there.
The features of the land itself, and even the ones of the surroundings is a great pointer so as to learn how much will the value of land will increase. Your analysis should thus be precise and in detail. Hollywood Boulevard is one of greatest examples of how the features of land and its surroundings affect its price.
Point number one, get in touch with banks and public lenders and get pre-approval of the real estate loan. Calculate the installments, closing cost, add up potential interest rates and then, compare the same with your research. If you feel that the investment cost is much lesser than the sales costs that you are anticipating, then the purchase is worth it.
The best thing about land investment is that the demand and price are always going upwards, and there is going to be no dearth of potential customers once you decide to sell the land.
There are many options that you can execute before selling the land, for example you can develop the land or construct an entire set of buildings or some houses or some commercial place before selling. Developing a farm or any other commercial place before selling that piece of land is also a great idea for a side business, till you decide to sell the place.