Owning land is an investment opportunity that is certainly advantageous. Whether you’ve got land in your family or you’re looking to spend your savings on land ownership, there are ways in which you can make it a long-term business tool.
In this guide, you’ll learn everything there is to know about owning land and how it benefits you as a business opportunity. It’ll cover some useful tips to make your land ownership a profitable one and one that will hopefully last long after you’re gone, so it can remain in the family.
The benefits of owning land
There are a number of benefits to owning land, from financial opportunities to maintenance and flexibility.
Financial benefits
Land is a finite resource and as such, increases in value over time. This is due to the demand, which acts as a hedge against inflation. It’s one of the few benefits that can provide some degree of financial security, provided the property market experiences no significant crashes, etc.
You can earn a passive income with leasing land for recreation, renewable energy projects, farming, or commercial development. It can also be helpful for portfolio diversification as a tangible asset. It performs differently from bonds or stocks and provides a lot more stability during market fluctuations.
There’s also a lot of potential for future development with land, or you can sell it for profit at a later date.
Maintenance and flexibility
There’s a lot of flexibility with land ownership. Owning land provides you with the freedom to decide its future use, whether you’re using it for building homes, agriculture, or conservation.
Vacant land will generally require less upkeep, and unlike houses or commercial buildings, it lowers expenses and reduces time spent on management.
Other advantages
There are a number of other advantages that come with land ownership. Land ownership provides a sense of stability and permanence that many people like the idea of.
Tax advantages are available depending on your location. You may be eligible for tax deductions or potential capital gains tax exemptions on profits. It’s worth looking into this further, depending on where you’re based.
There’s a lot of financial security that comes with land ownership. It’s a stable foundation that offers long-term wealth preservation. It may also help with potentially increasing your borrowing capacity, too.
Top tips for using land as a long-term business tool
To help utilize land to your advantage as a long-term business tool, there are plenty of ways in which you can help maximize its financial success. Here are some top tips for using land for financial investment.
Research and planning
There should be a lot of research and planning that goes into land investment. Let’s take a look at what steps are necessary in the initial stages.
Assess growth potential
Assessing the growth potential of land is the first step. Researching the land and its surrounding areas helps to understand growth opportunities, analyze the competition, and identify trends.
Define your goals
A clear strategy is important to have from the outset. Defining your search focus, which includes the size, type of development, and desired location. Consider your exit strategy and what that might look like in case you need to exit the investment sooner rather than later.
Stay informed on market rates
Market rates are something to continuously monitor, as there are shifts that happen in the industry, and that might require you to make informed decisions about your future investment.
Be aware of exemptions and limitations
It’s good to be aware of any exemptions and limitations that come with land ownership. Knowing timber exemption answers, for example, or development restrictions on property are all helpful to be aware of.
Strategic growth
Strategic growth is a big part of making land investment work for you. With that being said, here are some useful steps that will help make land a long-term business tool that works.
Start small and reinvest
First and foremost, begin with a smaller-scale operation in land ownership to help minimize initial risk. Reinvest profits so that your investment in land ownership remains a profitable one as you build and expand on it.
Every small bit of profit that’s made will help to grow your business further and help you explore future investment into additional land and property.
Explore what investors and companies are out there to help with initial investment too if needed.
Build relationships
When it comes to land ownership and investment, you should make the effort to connect with other investors within this industry. Attending network events can help cultivate strong relationships with people who might be able to help in your future opportunities.
From developers, to local authorities, and investors are crucial connections that will help in your success.
Financial and risk management
There are a number of financial and risk management opportunities that should be factored in when investing in land ownership.
Firstly, consider your risks. It’s important to recognize that all investments have risk, and a thorough understanding of the land itself is therefore required. You should also be paying attention to the market in order to mitigate any potential pitfalls.
Securing funding is another good step towards improving your efforts in the property and land investment market. While some people might have savings to use, not everyone has the substantial capital needed for land investment.
So with that in mind, explore what funding options are available for those looking to invest in property specifically. It’s worthwhile to create a pitch pack that will serve as a presentation for any future funding.
Using land as a long-game business tool is definitely something that’s impactful financially. With that being said, you should explore your options available for land ownership and do your research into it heavily before committing to it. There are plenty of benefits to land ownership, and so exploring such opportunities is worthwhile.
