We’ve spoken about land investments before and they present a unique real estate investment type. When you see all the different property investments out there, you forget that they only exist because someone has bought the land these properties are being built on. Therefore, having some land can put you in a very powerful position to make a lot of money.
Your first instinct might be to build or develop properties on this land yourself. You could do this, but there are a few drawbacks that might set you back. Instead, most people will sell their land to developers. Why is this such a popular idea? Here are three reasons for you to consider:
There’s always a huge demand for developable land
As you’re well aware, property development companies are pretty much latching onto any available land they can find. A quick look around your local area will show you multiple new developments in the last year or so alone. The fact is that populations are growing and there’s a need for more houses and homes. So, if you own land that’s developable – in other words, it can be developed – then there will be a huge demand for it. Developers will be queuing up to bid on your land, driving the price through the roof. Everyone will be desperate to get their hands on it so they can begin another wave of property developments in your area.
It’s a low-cost method of gaining money
Effectively, what you’re doing here is buying land and selling it for a profit. It’s basically a form of flipping, but it is a very low-cost method of gaining money. You don’t have to pay much to get a profit on your investment. Other than the initial cost of your land, you will probably only pay for an agent to help you sell it to the highest bidder. If you developed the land yourself, you might get more money in the long term, but think of the added expenses. You’d need to pay contractors, architects, surveyors, etc. There’s also crane hire, machinery hire and all the other things needed to help you turn your land into property development. Selling to developers is a low-cost and much faster idea.
There’s a very low risk involved
So many things can go wrong during the property development cycle. Issues with contractors and supplies can mean that the building process goes on for far longer. Then, what if there are problems with the homes when they’re built? Residents could sue the people behind the development, which would be you. You may also discover midway through development that it’s going to cost far more than you thought, meaning you may have to pull out and cut your losses. The point is, there are lots of risks involved when you develop on your land. However, if you sell it to a developer, you pocket your money and let them worry about the risks while you go and invest in more real estate!
All in all, selling land to developers is the best way to make money from your investment. It’s highly profitable, there’s demand for your land and it’s a low-cost method with minimal risks.