Land is the single largest expense for most real estate investors in commercial real estate.
However, it is also the most overlooked asset.
It’s not uncommon for real estate investors to spend hundreds of millions of Nairas on a piece of land without doing their homework first.
Investors who neglect to investigate the value of the land they’re purchasing are leaving money on the table.
To get the biggest bang for your buck with land as an investment.
You need to be strategic and thoughtful about your purchase.
The fact is that real estate investors should take into account several factors when evaluating a piece of land as an investment opportunity.
And here’s the reason.
Eystone study shows that 75% of property investment doesn’t scale at all…
- In terms of a property portfolio, 75% of them don’t scale at all due to several reasons like location and authentication in returns.
This means, that when it comes to real estate investing, no other asset class offers the opportunities and range of options as land.
With land, real estate investors have the chance to secure a long-term asset with minimal maintenance, little risk of obsolescence, and a high potential for appreciation.
That being said, buying land as an investment can be a tricky proposition.
Not every piece of land is worth its value as an investment.
However, with the right strategy and research, real estate investors can maximize their land value and see great returns on their investment.
So, how do I know?
As real estate investors, the value of the land is the big deal
The value of land is only increasing as the world becomes more urbanized.
The cost to build new land is also rising, meaning that it’s becoming more difficult for developers to create profitable real estate projects.
That’s the reason that investors should take this as an opportunity to get involved in the lucrative land market.
While many see land as a non-liquid asset, savvy investors can see beyond that and see it for what it really is.
A high-value piece of property with lots of potentials.
If so, are you curious if you have what it takes to invest in land?
Here are 7 tips on maximizing your investment potential as a real estate investor…
- Narrow your focus
- Research your market
- Check out the property yourself
- Examine the land title and survey
- Think about future development options
- Think about the long term
- Secure the perfection of the land document
Narrow your focus
There are several reasons to narrow your focus when evaluating potential land investments.
First, it’s important to understand the market dynamics in the area you are investing in.
This will help you to understand the value and demand for land in that region.
Additionally, narrowing your focus will help you to identify the types of properties that will be in high demand in that area.
Also, this will help you to identify the best investment opportunities that are a good fit for the land you are looking to buy.
Research the market
To truly understand the value of a piece of land, you need to do your research on the market in the area where the land is located.
This includes understanding the current supply and demand of commercial real estate in the area.
Understanding the supply and demand for real estate in the area will help you identify the price range for different types of commercial properties.
This will be helpful as you evaluate potential properties to purchase as investments.
Check out the property yourself
Before you decide to purchase a piece of property.
It’s important to see the property yourself.
This will help you to take a more in-depth look at the property, as well as the location.
Not just that.
It will also help you to identify potential issues with the property or the location that could impact the future value of the property.
This information can help you to make a more informed decision about the investment opportunity.
On the other hand, it can also help you to negotiate a better price for the property since the seller will know that you are aware of the potential issues.
According to Investopedia, Inspectors vary in experience, ability, and thoroughness, but a good inspector should examine certain home components and then produce a report covering their findings.
The typical inspection lasts two to three hours, and you should be present for the inspection to get a firsthand explanation of the inspector’s findings and, if necessary, ask questions.
Examine the land title and survey
Before you close on a piece of property, you will want to make sure you thoroughly examine the title of the property.
A title search will help you to identify any issues with the title that could impact the value of the property.
This may include:
- Liens on the property
- Outstanding taxes
Or other issues that may affect the value of the property.
This is particularly important if you are purchasing raw land for development.
You will want to make sure that there aren’t any issues on the title that could affect future development efforts.
In that case, you will also want to make sure that the title and survey are correct.
If you are purchasing a commercial property, state laws dictate that a surveyor is responsible for drawing up the boundaries of the property.
This survey will show you the precise measurements of the property so that you know exactly what you are purchasing.
Think about future development options
One of the best ways to increase the value of your investment is to purchase land that has the potential for future development.
This may be an option for commercial properties in areas that are expected to experience significant growth in the coming years.
In this case, investing in properties that offer the potential for future development will help you to increase the overall value of your investment.
This can help you to recoup your initial investment sooner, as well as increase your return on investment.
Think about the long term
When you are evaluating a piece of land for purchase.
It’s important to think about the long term.
Surely, this will help you to identify properties that are in high-growth areas, as well as properties that offer the potential for future development.
Investing in areas that are experiencing significant growth will help you to increase the value of your land.
As the area grows, so will the demand for commercial properties in the area.
In such a case, it’s important to think about the long-term when determining what type of land to purchase.
You’ll want to consider factors such as soil conditions, vegetation, and proximity to utilities.
These factors can affect the development potential of the land, as well as its value.
Secure the perfection of the land document
If you own land that’s not being used for anything, in particular, you might be wondering what the best way to increase its value is.
After all, it’s not something that you can use every day, so it’s hard to know what you could do with it that would make it more appealing as a piece of property.
When you own a plot of land, it’s probably not the most lucrative asset that you own.
In many cases, your land may not be worth as much as the house or other improvements on the property.
However, that doesn’t mean that the land is worthless.
Even if the land itself might not have a lot of value right now, there are ways to increase its value over time.
And that is when you secure the perfection of the land document.
Today, more and more people are looking at alternative ways to invest their money.
Real estate is one of the most stable investments out there, but only when you buy the right properties in the right locations.
Even though many people shy away from investing in land because of its unappealing reputation as a “bargain” investment, buying property can be a great way to supplement your income.
If you are thinking about buying some land yourself, you should know that investing in it isn’t cheap.
However, you can increase the value of your land significantly so that selling it later on for a higher price won’t feel like such a burden.
So, if you are thinking of investing in real estate, we’ll be glad to make you an investor.
Kindly get in touch with us here. I want to invest in landed property