How To Invest in Land? 10 Step Approach To Land Investing 

May 16, 2024

To invest in land: 

1, Analyze land buying data in the local area

2. Use direct mail marketing to find off-market deals 

3. Search in online marketplaces and tax auctions 

4. Build your network with investors and realtors 

5. Sub-divide large parcels of land 

6. Follow all legal processes 

7. Offer seller financing to buyers 

8. Earn quick cash through wholesale flipping 

9. Consult surveyors and zoning experts, and 

10. Leverage real estate websites and brokers to sell your property. 

The key to land investing is finding an undeveloped property under market value. It requires understanding the different types of land and their profitability potential. You should also study zoning regulations and property taxes. Set clear and achievable goals and decide on a budget. Leverage online sites for scouting properties. Zillow, Landwatch, Craigslist, and auction sites are great places to start. Conduct a thorough assessment once you find a potential land investment. It should have a good demand. There should also be future planned developments within and around the area. 

Land investing may sound easy. But it's a tedious and complex process. 

This guy said it's not the business for broke people. Raw land might take some time to appreciate. You need lots of back up cash to keep you afloat. 

The Wall Street Journal reported an increase in demand for land post-pandemic. Expert realtor, Wayne Turner, believe that it's still a good investment. According to him, rich people buy land because it's scarce. As population increases, so will the demand for land. It's a valuable long-term investment. 

This article breaks down the land investing business. The types of land investments are also explained. And, the 10 most affordable places to buy land in the U.S. are revealed. 

10-Step Approach To Land Investing

  • Do Market Research: Analyze growth trends to identify emerging regions for land investing. Consider the area’s 30-year development plan. It should have good infrastructure development and economic activity. Local zoning laws will also help you identify land investing opportunities. 
  • Conduct Direct Mail Marketing: Send out letters to property owners. This will help you land the best deals in the market. Focus on those who are rushing to sell their property.  Dallas and Fort Worth are great places to start your search. They’re two of the largest U.S. cities with vacant land. 
  • Search Online Listings and Auctions: Leverage online marketplaces to find land for sale. It’s best to buy directly from owners. Tax auctions also have lots of great deals. 

  • Build Your Network:  Connect with real estate agents and developers. Get insights into which areas are planning long-term growth. Attend real estate events to get to know other realtors and investors.
  • Sub-Divide Large Lots: Sub-divide large parcels of land into smaller lots. This makes it easier to sell. Installing basic utilities like electricity and water increases land value.
  • Land Entitlement: It’s a legal process needed to develop land for a specific purpose. This includes zoning changes from residential to commercial or agricultural to industrial. There’s also subdivision approval and utility permits for water, sewage, and others.
  • Seller Financing Option: It’s usually cheaper and quicker than a commercial mortgage. Buyers pay a down payment of around 10% to 30%, and seller covers the balance. Seller financing is usually a 5-year balloon loan.
  • Consider Wholesale Flipping: It's a buy-and-sell process. It involves buying a large parcel of land and quickly selling it to developers. Find underpriced properties from financially distressed sellers. The key is to convince the seller that the quick transaction was worth the price discount.
  • Consult Professionals: Work with surveyors and zoning experts. This helps speed up the buying process. This also ensures you're complying will all legal requirements. 
  • Listing the Property: List the improved/developed land for sale. You can market through real estate websites or brokers. You can also directly approach potential buyers.

Sharon Tseung: How to Find Off Market Properties Using Direct Mail Marketing

Find off-market deals by writing to people who might be facing financial distress. These are individuals going through divorce, money problems, and other life challenges. They might sell their property below market value. Use PropStream to create a list of potential sellers. Filter the list and focus on foreclosures and tax liens. Use tools to write your letter. Your two options are: Yellow Letters Complete and Open Letter Marketing. You can write as postcards and hand-written letters. Monitor the responses to track your progress. Adjust your strategies based on the responses. 

Jerry Norton's Tips To Maximize Direct Mail Strategy

  • Improve List Quality: Focus on pre-foreclosures, out-of-state owners, and tired landlords. 
  • Increase Your Email List: The more emails you send, the more responses you get. The standard industry response rate is 2% to 4%. Beginners usually start at 1% to 3%. 
  • Write a Compelling Email: Use expert-designed templates to grab attention. Jerry Norton says it saves you time and money. 
  • Increase Mail Frequency: Send follow-ups emails on the same list every two weeks. It usually takes 3 to 6 touches to get a response. 
  • Never Miss a Reply: Set-up a 24/7 live answering service. This ensures you never miss a call.  

What are the Types of Land Investments

Raw Land: Barren land without improvements and infrastructure. It rarely has access to electricity and water. Others don’t even have access roads and right of way. 

Agricultural Land: Its primary purpose is farming and livestock raising. These are fields, pastures, orchards, and vineyards.

Commercial and Residential Development Land: Commercial land is designed for income-generation. Used for retail stores, offices, restaurants, hotels, or warehouses. 

Residential Land: A residential lot is solely intended for housing development. It is used for building single-family homes, apartments, condos, and mobile home parks. 

Recreational Land: Land used for leisure activities. This includes camping and hunting ground, or fishing. Recreational land can provide passive income through rentals. Used for Airbnbs and glamping sites. 

Which Land is Best for Investment?

Commercial land is best for investment. It has the highest income potential, especially in prime locations. Commercial land is typically leased long-term. So, you enjoy predictable monthly passive income from rentals. Holding costs are lower because tenants pay the taxes. Some even pay for insurance and maintenance. It also appreciates faster than the other types of land investments. Improvements in commercial land always increase the property value. So, the risks are lower and there’s better income potential. 

How Much Does it Cost to Invest in Land?

It costs at least $20,000 to invest in land in the U.S. However, the price can vary based on several factors. The size of land and its purpose affect the selling price. The most expensive is commercial land. It costs millions of dollars in prime business districts. Residential land in urban areas starts at $100,000 per acre. It can go higher in upscale locations. Farmland ranges from $2,000 to $12,000. The price varies based on the area's agricultural potential. Rural and undeveloped land are the cheapest. They can go as low as few thousand dollars per acre in remote areas. Accessible locations are a bit more expensive. 

What are the Costs Involved in Land Investing? 

Purchase Price: Cost of the property based on its location and size. 

Closing Costs: This includes land survey costs and attorney fees. Transfer taxes are also counted under closing costs.

Due Diligence Costs: The cost of environmental assessment and zoning compliance check. This includes land use study and market analysis. 

Financing Costs (if you're loaning the money): Includes prepaid interest and interest payments. 

Investment Property Tax: The average property tax rate is 1.10%. It is computed based on the assessed value of the property. 

Legal and Professional Fees: Costs for legal advice, tax planning, and consultation. 

Utilities and Infrastructure: Installation of water and electricity. This also includes sewer systems and access roads.  

Kai Andrew Believes It Is Best To Buy Land in Rural Areas

Kai Andrew believes it is best to buy land in rural areas. There's less competition compared to urban properties. The price of land is also cheaper. Square footage can go as low as $5 in low demand areas. There are also fewer restrictions on rural land compared to urban. This means low barriers to entry for real estate investors. Land in rural areas offers great potential for rental properties. The unique location and experience attract more guests. These factors contribute to higher returns. 

10 Most Affordable Places in the U.S. To Buy Land in 2024 

  • Apache County in Arizona: Located in the northeastern corner of Arizona. It provides beautiful scenery and rich Native American culture. Price per acre is usually around $4,645. 
  • Lake County in Oregon: High desert terrain and nearby Lake Albert, Summer Lake, and Goose Lake. It provides vast open spaces and a quiet, rural lifestyle. The average price for an acre of land in Lake County is $16,200.
  • Mora County in New Mexico: Located in the northern part of New Mexico. Mora County is known for its picturesque valleys and historic sites. The average price for an acre of land is about $5,448. 
  • Jackson County in Arkansas: Located along the White River. It is primarily an agricultural region with some forested areas. The average price for an acre of land in Jackson County is $8,100. 
  • Costilla County in Colorado: Diverse terrain with historic sites, valleys, and mountains. The average price for an acre of land in Costilla County is $8,214.
  • Holmes County in Mississippi: Known for its rural landscapes. The Yazoo and Big Black Rivers borders this area. The average price for an acre of land in Holmes County is $9,720.
  • Shannon County in Missouri: This area has many lakes, rivers, and creeks. The average price for an acre of land here is $11,100.
  • St. Lawrence County in New York: Located in the northern part of the state. It features rural landscapes and the Adirondack Mountains. The average price for an acre of land in St. Lawrence County is $12,309.
  • Harmon County in Oklahoma: Flat rural area with lots of farmland. It is boardered by the Red River. The average price for an acre of land in Harmon County is $8,405.
  • Perry County in Alabama: Historical towns of Marion and the Marion Military Institute. The average price for an acre of land in Perry County is $18,100.

How to Make Money Investing in Raw Land? 

Subdivide large parcels of land into garden plots for lease. People who want to grow their produce can rent them out. You only need basic garden tools and water supply to start. Create a community market within the area to increase the rental garden’s value. 

Leasing your raw land to billboard owners also earns passive income. And it increases the value of the real estate property.

 Building a campsite is cheap and requires little capital. You don’t need to build a structure. Just a water supply and a hook-up for RVs. This is ideal for lands with scenic views.

Investing in Land Pros and Cons

Pros of Land Investing 

Land appreciates over time 

Can be used for various purposed like residential development, commercial projects, and agriculture

Vacant land is low maintenance 

Increasing demand in some areas

Cons of Land Investing 

Harder to sell compared to other types of real estate 

Recurring expenses like property tax, capital gain, and insurance 

Doesn't provide immediate income 

Land appreciation is dependent on market trends 

Natural calamities and environmental conditions can decrease the value of the property 

Key Considerations When Investing in Land

Location: Look for areas with growth potential. These include economic expansion, population influx, and planned infrastructure developments.

Bigger Down Payment: Buying land requires larger down payment than buying a house. You'll need 20% or more. It also has a shorter loan term compared to first home purchases. The maximum loan term for vacant land is only 15 years. 

Zoning and Land Use Regulations: These will dictate what you can (and cannot) do with the property.  Research for potential development restrictions of the property. 

Market Trends: Consider the property value and current demand. Also, look into the overall economic condition of the area. 

Utilities: Ensure the area has access to water and electricity. There should also be a proper sewage system. It should also have signal and internet access. 

Future Development Plans: Look into future development plans in the area. Construction of new roads and schools will increase property value.

Legal Issues: Ensure the land has a clear title. It should not have legal disputes or outstanding liens.

Purpose: Determine what you want to do with the property. This includes developing, holding, or leasing the land. Most real estate investors resell the land for profit. Understand your goal and the steps you need to take to get there. 

Investing in Land: Reddit Experiences 

8 years ago, people already think it's a terrible investment. It's only a good investment if you intend to use it for farming or as timberland. You can't get an investment land loan on unimproved land. Access to basic utilities like electricity might also be expensive. Even installing a septic tank will require a special permit from the county. 

You may lose more than you gain with raw land investing. 

In recent times, people still think that land is an alligator. There's no cash flow and you constantly pay for holding costs. It may not be a good choice if you want to monetize the investment. 

Connecting basic utilities to your property remain to be the biggest concern. Your investment might get stuck in the next 10 years. 

Land Investment Courses

Dan and Ron Apke's Land Investing Online is a beginner-friendly land-flipping course. Participants learn to buy and sell vacant land at a profit. The platform offers different learning packages. Land Investing Bootcamp + CRM, offers both modules and system. And, the Land Flipping Bootcamp, which is a 16-chapter course. 

Jack Bosch's Land Profit Generator teaches practical land-flipping strategies. It focuses on buying cheap land from distressed sellers. The goal is to flip the land for profit. The platform offers both free and paid learning options. It also includes a comprehensive coaching program for personalized guidance. Its key program is the Land Profit Quickstart. There's also an in-depth coaching program for serious investors. Both offer a low-capital entry to the real estate business. 

The Land Geek by Mark Podolsky teaches individuals how to generate passive income from raw land investing. Mark emphasizes in this course that land investments can be managed remotely. You don't need to physically check the property. His goal is to automate most parts of the process. This system scales the business fast.

My Alternative To Land Investing: Digital Real Estate

Digital real estate is a better investment than land. The costs are lower because you only need domain names and websites. You can manage digital properties virtually. So, it's easier to develop and maintain. It also appreciates faster than raw land. It takes years for land to increase in value. But, ranked sites make money in just three months.

Land investing is risky. It's hard to find high-potential properties under market value. Raw land also appreciates much slower than developed real estate. If you can't connect utilities to the land, it decreases in value. It's common for investors to lose money on land investments. 

I prefer digital real estate because it only needs minimal capital. You can start with just $500 to $2,000. The demand for digital real estate is also increasing in this digital age. Digital properties can reach a global audience. So, you have a larger potential customer base. The risks are lower in case the market conditions are unfavorable. They're also cheaper to maintain. You only need to pay for hosting fees, domain renewals, and occasional updates. 

Think long-term. Go for digital real estate if you're looking for an investment that earns passively. 

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