GREAT REASONS WHY VACANT LAND INVESTMENT IS GOOD
On many occasions, I have heard real estate experts say vacant land is one of the most overlooked and misunderstood real estate investments in the world. Personally and truly so, whenever I encourage people to specialize in buying and selling LAND, I often get a lot of blank stares. There seems to be a widespread (and erroneous) assumption that vacant land is a “weak” or even pointless investment because, it doesn’t produce income. It just sits there and nothing happens. It’s flat out boring. However, as someone who has worked as a property journalist over the last ten years and have also done one or two investments in vacant land, I certainly know this is an unfortunate misconception, because the truth is, vacant land is capable of producing some serious cash flow and it’s one of the best investments on earth because of its hands-off nature and versatility.
I LOVE the fact that land just sits there and nothing happens. The simplicity and stability that comes with owning the right piece of land, purchased at the right price, can far outweigh the myriad of problems that comes with any other type of real estate. If you’ve overlooked raw land as a viable investment opportunity in the past, you need to take a few minutes and get educated about what land is all about! So let me in quickly share with you 10 reasons you should be investing in land.
WITH VACANT LAND, YOU DON’T NEED TO DO “ANYTHING” TO THE PROPERTY
Forget construction! Forget renovations! You don’t need to be an expert or know anything about how to renovate a property yourself. In most cases, you really only need to know one thing: “Is the property suitable for building?” As long as someone else can build on the land if/when they want to, a huge part of the battle is already won. In a very volatile property market like Lagos, the most you need to do to secure the land is get all the necessary title documents and ensure you create a physical presence on it.
RAW LAND IS A “HANDS-OFF” INVESTMENT
Have you had enough of troubles dealing with tenants, toilets, bugs, mold, leaking roofs, bursting pipes, and the hundreds of other issues that come with owning buildings? Vacant land doesn’t involve ANY of those things. Once you buy it…it sits there, it behaves itself, and nothing happens.
STATISTICALLY VACANT LAND OWNERS ARE HIGHLY MOTIVATED TO SELL
Why? Because vacant land owners (by default) are always absentee owners. When a person doesn’t live inside of (or even near) the property they’re trying to sell, there is less of an “emotional connection”, because it isn’t their primary residence. In many cases, you’ll find that these sellers are willing to sell their land for reasonable prices simply because they don’t live anywhere near it, it’s not producing any income for them (because they don’t know how to optimize their land correctly) and as a result, they are much more apathetic about it. Find these people, and you will find some incredible deals.
LAND INVESTORS HAVE LITTLE COMPETITION TO DEAL WITH
Are you tired of dealing with such stiff competition on every property you try to buy? Are you sick of getting outbid on every good deal you’re lucky enough to find? Well guess what, there is virtually no competition in the world of raw land investing. Most real estate investors have their minds stuck on things like houses, apartments, commercial property and the like because that’s what everyone else does. Most investors don’t understand the superior benefits that come with land and this can definitely play to your advantage.
LAND INVESTORS CALL THEIR OWN SHOTS
When you buy vacant land the right way, it’s easy to buy each property with your own cash and completely avoid dealing with banks and mortgage companies. A prominent and highly successful land investor once told me that when he got started as a land investor, he had about N5million to his name and to this day, he has never had to borrow money from a bank. His logic is simply that when you know where to look for great deals on land, it requires very little start-up capital to get your business up and running.
THERE IS AN UNCOMMON EASE THAT COMES WITH LAND INVESTMENT
Another successful land investor told me that in 2011, he bought and sold a parcel of land and grossed over N2million and that the entire process took me 5 months from start to finish and he never really had to do much to get the deal done and concluded. “The beauty of land is that it doesn’t involve any structures. This means the inspection process is very simple and if you’re doing the right research, you can easily buy your properties without ever having to do much.
LAND IS VERY INEXPENSIVE TO OWN AS A LONG-TERM INVESTMENT
When you buy a piece of land for the right price, there are no mortgage payments to make, no utility bills to pay, the cost of property insurance is nominal (if you have it at all) and property taxes are extremely cheap; take for example calculations on the Lagos State Land Use Charge. If you want to park your cash somewhere and forget about it, vacant land could be exactly the investment vehicle you’re looking for.
LAND GIVES ITS OWNER A RELATIVE PEACE OF MIND
Think about it – land is a long-term, tangible asset that doesn’t wear out, doesn’t depreciate, and nothing can get broken, stolen or destroyed. Put all of these benefits together with your ability to buy it for next-to-nothing and can you think of a better combination? I am not sure there is any that can beat that.
LAND GIVES UNBELIEVABLE RETURN ON INVESTMENT
A senior colleague once shared a story with me about the limitless opportunities that one can get from investing in vacant land. He said his elder sister about twenty year ago while celebrating her 40th birthday was given a plot of land in the Ikota are of Lekki as a birthday gift. “At that time a plot of land in Ikota sold for around N1m. My sister never really thought of doing anything serious with the land since she already has a couple of plots and houses in Ikoyi. Ikota to her was a “bush” and truly twenty years ago, Ikota was not as developed. All she did at that time was to construct a fence round it so as to stop any form of encroachment. In January this year, she decided she was going to sell the land. It was put in the market at an asking price of N30million. She eventually sold the land for N27million in March. From N1million to N27 in just twenty years of practically doing nothing to increase the value of the land. The value of the land has appreciated all by itself without my sister doing what many will call “sit-down-look”. It was really an eye opener to the possibilities and many opportunities that comes with investing in vacant land”, he narrated.