Nowadays, most investors prefer investing in established properties like commercial and residential properties in order to obtain immediate source of income from their investment. This drives up the competition which lead to high prices in most markets. Raw land on the other hand, has minimum competition to deal with. This is because normal investors avoid investing in raw land because it generally will not earn income on a regular basis.
Buying raw land is relatively inexpensive to acquire and own compared to a developed property. It has minimal carrying costs, including lower property taxes and insurance, and little to no maintenance cost since maintenance on undeveloped land is usually not required. Vacant land can be purchased and held on to until appreciation rates reach a level where it can be sold for a profit without any additional maintenance cost.
The biggest benefit of investing in raw land is its appreciation potential. Even in times of economic uncertainty, raw land is a hard asset. It can be put aside in confidence that the passage of time, plus inflation and population explosion, will add to its value. Since land is such a scarce resource, it will always be valuable, even if market conditions are rough. As land continues to be developed, vacant property becomes harder to come by. This will eventually push the price and value of vacant land higher.
As an investor, the allure of raw land investing is in the opportunity it holds. Aside from earning long-term appreciation, the land can be developed into further possibilities, like a single-family home, multifamily property, or condominium. Although zoning and building codes may limit an investor’s opportunities depending on the location, raw land offers the ability for investors to choose and develop their own investment path from scratch.