Top 6 Land Investment Myths Debunked

by : mathew g

1. Myth: Land is land. Why should I pay a higher price for some land?

All land is not necessarily the same. In addition to residential land there are also five different grades of agricultural land. The location and quality of the land are extremely important factors when it comes to determining of the price of a land investment.

2. Myth: Investing in land requires a lot of money

The value of land with planning permission can be up to 10 times that of land without. Obviously, purchasing prime land with planning permission is more expensive. But it can actually be good for investors if you can purchase land before it gains planning permissions. Then you can buy land when it is cheap before and wait for it to increase in value.

3. Myth: Land values rise slowly

The rate that land value increases largely depends on the specific demand, however in some areas the value can rise as much twenty-five percent per year. As with any large investment you cannot expect sudden increases and have to remember that it is a long-term investment. However, keep in mind that purchasing land far away from residential areas will almost certainly rise more slowly than prime plots of land for sale next to existing housing.

4. Myth: Investing in land requires specialist knowledge and skills

Like any investment there are always going to be risks. Any sensible investor will obviously try to minimize the risk they are exposed to. But having said that, there is no special technical knowledge required. You don't need to know how to take soil samples, subdivide plots of land for sale, grade roads or be an expert in the building trade. If you need this kind of expertise, you can hire a specialist. You can find out about the investment land available in your area quickly and simply by using a real estate agent.

5. Myth: Investing is only for the extremely wealthy

While land has been part of the millionaires portfolio for thousands of years, it is no longer available to just the wealthy. With more sophisticated investments being structured, such as dedicated real estate/land funds, and the emergence of land banks, it’s possible to invest in land from as little as a few thousand dollars per purchase.

6. Myth: The type of land you purchase has no effect on its potential growth in value

Nothing could be further from the truth. The type of land you purchase will have a very big effect on its ultimate growth in value & potential for resale. For example, not all land is going to be suitable to residential development. If you purchase land that is of a non-residential nature there may be little scope for you to resell it to a developer. Additionally, land that is currently without planning permission can be quite valuable if it’s about to get approved for development.