A Successful Strategy For Investing In Land!

I have often heard, I will buy some land when I win the lottery. Good Luck…you have about a 1 in 3,000,000 chance of winning your lottery.

Here are some tips to get you started and achieve your dream of owning land:

1)    Start Small – Buy a small tract of land and work up to a large tract over time. This will probably take years, but you will become a better buyer over time. If you buy the right parcel of land it will appreciate over time and produce intermediate cash flow along the way. Cash Flow comes from timber harvesting, hunting leases, farm rent etc. Your first purchase maybe 20 or 30 acres. After you have built up some equity in the property it may be time to look for a larger tract and now you are an experienced land buyer!

2)    Purchase Smart – Work with an experienced agent who understands the market. Sometime there is property for sale that is not listed and an agent may have knowledge of these properties. These are properties where the owner wants to reserve the right to sell the property to a friend or relative.  If you buy smart, you might have immediate equity in the property.

3)    Financing - Seller financing is a great tool when purchasing land.  Seller financing isn't always advertised when the property is listed.   With seller financing the more you have to put down often the more attractive it is to the seller and in addition, the seller is able to collect the principal and interest.   The advantage to the purchaser is that they don’t have to go through the loan process, appraisal, underwriting etc with a commercial bank. Sometimes it is necessary to offer options ! Seller financing used in combination with your own funds or bank funds often is the difference between being able to purchase or not purchase the land!

4)    Income –  Income from property is derived 2 ways. One is the appreciation of the property (difference in the sales price and your basis).  The second method is intermediate  cash flow. From farm land these can be farm rent or leases, if you are actually farming the land. Timberland can create cash flow from thinning, select cuts or final harvest. Recreational property can generate hunting lease income and some property can offer a combination.

5)    Timber – Although this was part of the Income section above, let’s go into a little more detail. With timber buyers running the roads, deals are becoming harder to find. I use to cruise timber for a large landowner in Alabama and frequently he would buy the property for the value of the timber. In other words, he would sell the timber and have no money in the dirt. This is not so common place any more, but if you look hard enough you might find a property whereby the timber would pay 25 – 50% of the purchase price. These timber tracts offer some really nice recreational opportunities as well.

With Land prices at the lowest they have been in over 10 years and interest rates at historic lows, now might be the time for you to buy that piece of property you have always dreamed of owning !!

 For More Information on Buying or Selling Land, contact G. Kent Morris, ALC, RF   at     (706) 457-0090