There are hundreds of ways to invest your money and they all have their level of risk, but buying land is a fairly reasonable investment if done correctly. Land is a valuable and limited resource that’s always nice to have in your portfolio – not only for the financial benefits, but for your enjoyment as well.
Recreational, raw, or bare land doesn’t cross people’s minds as an investment nearly as often as residential or commercial real estate because it’s simply not as common. However, if you enjoy the great outdoors, this may be the perfect investment for you. Here are some of the financial benefits of owning rural land:
- Tax Deductions: Owning vacant land may have tax benefits. Although the land will not create income on its own – in fact, it often creates expense such as property taxes, interest, and other costs – you may be able to deduct those costs in certain circumstances. You may even be able to donate a conservation easement for a tax deduction. Also, if you put cattle on the land, or buy it for hunting and have wildlife on the property, you may can take advantage of an agricultural tax valuation, sometimes called an ag exemption, which could save you a lot of money. Of course, you’ll want to employ a tax advisor to learn more about the ins and outs prior to purchasing.
- Hands-Off Investment: You won’t have to deal with tenants, lawn-care, leaking roofs, bursting pipes, and all the other joys that come with traditional rental properties. Maintenance can be low, saving you time and money.
- Affordable Long-Term Asset: When you buy vacant land for the right price, it can make for an affordable long-term investment. There will be few, if any, utility bills to pay, property insurance is affordable, land won’t fall apart or wear out, property taxes can be reasonable in the right area, and interest rates are currently extremely attractive. If you’re looking for somewhere to invest with a high probability of value appreciation over time, then land may be the right purchase for you.
- Timber: Buying land from timber companies is an option that many overlook. Timber companies own many desirable acres and choosing to purchase some of this land may create an opportunity for you to profit from the timber in the future. You’ll definitely want to employ the right folks for this – a timber company experienced in this type of sale, a real estate broker specializing in rural real estate, and a lender like Texas Farm Credit with timber experts on staff.
- Rental Opportunities: Leasing your land may also be a way to make short-term money off your property. You may consider renting for camping, hunting, fishing, ATVing, or sports fields. Of course, if you begin to rent out your land, you may need to focus on land considerations such as additional expenses, zoning considerations, and permits that may come with that. But again, if you work with experienced people and do plenty of research before going down this path you could gain from your investment in both the short and long term.
Although rural land ownership can benefit you financially, you’ll soon learn that the biggest benefit will be the joy it can bring to you and your family! Recreational land can be used for so many activities that get you outside and into nature. If these are some of your favorite activities, then purchasing recreational land will give you the opportunity to participate whenever you want. Ultimately, the real benefit of recreational land is in your hands.
If you’ve made the decision to find and purchase a piece of land, it’s important to find a lender like Texas Farm Credit that understands this market and is able to determine land value accurately. We typically finance up to 20 years with no prepayment penalties. In addition, as a cooperative Texas Farm Credit is owned by its borrowers which means you’ll share in our profits, effectively lowering your interest rate even further. We’d love to help you find the freedom and flexibility that owning land offers. Reach out today – we’d love to hear from you!
Frequently Asked Questions
Buying land is almost always considered a good investment.
Undeveloped land is much less expensive in terms of maintenance and property taxes and represents a significant array of possibilities for future use. Considering that the amount of undeveloped land is decreasing at an exponential rate, that property will likely only increase in value, particularly for land in areas deemed desirable and experiencing rapid expansion.
We are not lawyers, accountants, or financial advisors and the information in this article is for informational purposes only. This article is based on our own research and experience and we do our best to keep it accurate and up to date, but it may contain errors. Please be sure to consult a legal or financial professional before making any decisions.