Benefits of Buying and Holding Land in Real Estate
Buy and hold is a no-brainer kind of investment option in real estate that anyone can do. It basically means buying a property and then holding it for a long period of time.
This is not an overnight kind of investment. It takes a little longer for you to see a substantial amount of appreciation.
ideally, as an investor, you can buy a house that is ready for occupancy and then rent it out. Alternatively, you can buy vacant land and then hold till a future date to develop or sell it. In this case scenario, we are going to look at the benefits that you get when you buy a piece of land and hold for prices to appreciate.
Appreciation of the property
When you buy land in a very strategic location, the value of land in that area will skyrocket in a short time and you will be able to make a profit out of it.
Land tends to appreciate faster if the infrastructure is developed near the property or if there is a major development in the area.
This is because infrastructure development creates demand for land and prices automatically rise.
Real estate investment can allow you to access high leverage that attracts tax reliefs every year as well.
Although mortgages for the land are easily accessed, there is some specific need help to refinance a mortgage firms that accept to inject their financing into the acquisition of vacant land.
If you have another primary residence, you can use home equity to acquire new land with a little down payment from your end.
Seller Financing arrangement
If you are dealing with a real estate company when purchasing vacant land, often developed by them, you will have access to their financing.
How this works is that the real estate company sells you the piece of land and then holds the title deed till you complete the payment.
What you need to do is due diligence on the company. The company has to have a good record and have been in business for a while.
Used as an Engaged Against Inflation
Real estate investment is perhaps the only financial instrument that you can use to protect your portfolio against inflation.
Land prices, house prices, and rent tend to rise as the inflation in a country is rising. This acts as a hedging instrument against your assets.
This doesn’t mean that you will be enjoying recession when the economy turns in that direction.
Easy Exit Plan.
Sometimes, things take different routes and might find yourself cornered financially. In real estate, there are so many possibilities of exiting out of your investment deal.
Some of the ways you can pull out of an investment are by selling the property, leasing out the property, and offer your property on seller financing.
Buying and holding a newly purchased piece of land can be a very good investment if you follow the right procedure of acquiring a vacant piece of land.
Research and engaged a reputable real estate company that sell plots or piece of lands in your neighborhood.
After purchasing, ensure that you have proper documentation including the title deed of your land, and possibly develop the property as you wait for prices to appreciate.