Unearthing Opportunity: Why Your Real Estate Investing Strategy Should Include Land Investments

Early settlers and pioneers in the United States were in search of the freedom, adventure, and prosperity that this new area offered. Similarly, pioneering investors are always seeking freedom, adventure, and (especially) prosperity through their real estate investing strategy – whether that comes from live event venues, laundromats, or the land that is underneath it all.

But, if you’re not interested in agriculture, what makes land a good investment?

  1. They sure aren’t making anymore! Land is a tangible asset with inherent value. Purchasing in areas that have positive population and job creation rates will be the baseline for appreciating land values. However, rural land can hold its value for other reasons (see #4).
  2. No maintenance required. Investing in land affords you greater control over your assets, compared to other real estate investments. Unlike rental properties which require ongoing management and maintenance, land can be a hands-off investment with minimal operational overhead, which simplifies your overall strategy.
  3. The potential for appreciation is high. While the land itself may not generate income like rental properties or commercial buildings can, it has the potential for substantial appreciation. Factors such as population growth, urbanization, infrastructure development, and rezoning can significantly increase the value of land. If you don’t need or want cash flow due to the taxes you would have to pay, a land investment with upside in capital gains may be an ideal part of your investing strategy.
  4. Land diversifies your investment avenues. Including land as part of your real estate investing strategy opens up a plethora of avenues for potential diversification. Whether its agricultural land, undeveloped lots, or parcels with good development potential – investors have the flexibility to choose assets that align with their risk tolerance, investment horizon, and financial goals. Furthermore, land investments can span various geographic regions easier than physical real estate investments, allowing investors to hedge against local market downturns and capitalize on emerging opportunities elsewhere. Land is easier to buy in areas where you aren’t local, as there is no maintenance to facilitate and less concern about market positioning.

Money-Generating Activities Associated with Land

  • Leasing agricultural ground to a farmer – Lease rates vary depending on the quality of the soil, but you can expect $350-1,000 per acre, per year.
  • Leasing ground to a solar company – This has become increasingly common in Pennsylvania due to the Net Metering laws. Average lease payments are $2,000-3,000.
  • Mineral rights – Much of rural Pennsylvania has led the way for natural gas production in America. The value of mineral, oil, and gas rights can be substantial for land owners in certain areas.
  • Commercial ground – Leasing ground sites to high-profile retail users is relatively common. Expect lease rates of $80,000-130,000 per year for pad sites of 1-2+ acres.
  • Truck parking – Do you see all of the tractor trailers on the roads? They need somewhere to sit when they’re not in transit. Trailer parking can bring $95-150 per trailer, per month. Proximity to warehousing and highways is essential for this strategy to work.
  • Waterfront land – Parcels along a desirable waterfront can be leased to homeowners for build-to-suit properties on long-term assignable leases. Rates can run from several hundred per month to several thousand, depending on the desirability of the location.
  • Land for hunting – All the hunters who pay to hunt on someone else’s land understand why this makes sense. There’s a large community of hunters nationwide who would love to find new land to use, and will pay big bucks to hunt there. You know who you are…
  • Timber harvesting – Many kinds of hardwoods present substantial value when harvested. That’s one less step for the next person who plans to develop your site.
  • Future Development – We saved the best for last, as this can be a completely separate discussion. If you purchase in the path of progress, and have the patience of a tortoise, you will be rewarded in the years to come. If this is your goal, seek guidance on the right locations from qualified professionals and target areas that are business-friendly. This will encourage development overall and ensure that your land is positioned correctly in the future.

By incorporating land into your real estate investing strategy, you can unearth a wealth of opportunities and solidify your financial footing for generations to come.

Many of our clients are looking to benefit from land investing but are concerned about the risk of losing value. We provide key insights from our expansive experience in the market, so all you need to do is collect the checks and brag about your deal. Contact our land investment experts today to get started.


More Posts

This image shows the interior of a data center.

What are Data Centers and Why Do We Need Them?

Data center development in the US is a dynamic and rapidly evolving sector. Find out more about what data centers are, what they do, and how that might fit into your real estate investing strategy.

Capstone Quarterly Newsletter – Q2 2024

Capstone Commercial is proud to publish this edition our quarterly newsletter. This issue features insights from our team on topics including the current and upcoming market, productivity, investment considerations, and more. We look forward to providing these updates each quarter. Be sure to sign up for our contact list so you receive new issues straight to your inbox!