Before making any sort of investment it is important to do your research because one of the main reasons people make investments is to make a profit in the future. Land is quite a safe, inexpensive investment, as there are no bills to pay, and no loans to pay off so it can be a smart way to hold cash for long periods of time. However, It is important to do your research into the land prior to investment, and see exactly why this land is up for sale. (Check out our blog on what to know before buying a ranch to learn more). However, sometimes vacant land can be a goldmine for investors, below we have compiled a list explaining the main benefits and drawbacks of investing in land.
Pros of Investing in Land
Great opportunity
Buying vacant land allows you to do whatever you want with it. You may choose to build a family home for you to enjoy with your loved one, or you can utilise the land for business purposes, such as farm work. The opportunities are endless.
More affordable
Buying vacant land is usually cheaper than buying land that has been previously developed. People who buy vacant land are most often cash buyers, making it cheaper again as there is no interest to pay back on a loan. Buying in cash means you can enjoy full ownership of the land, which is a tangible asset and won’t wear out.
Possibility to lease the land
If you buy a ranch and want to bring in some extra cash, it is possible to lease out sections of your land to farmers. This requires minimal effort on your part and can help to fund initial investment costs.
Tax Exemptions
If you buy ranch land and use it for farming, you will be entitled to certain tax exemptions, such as the homestead residence exemption or wildlife exemptions. These will significantly reduce your property taxes by thousands of dollars.
Cons of Investing in Land
Zoning and permit requirements
The land you buy may have restrictions already in place that may impact your development plans. It may be zoned for residential or commercial use, leaving you with little choice over what to do with your investment. These restrictions may add on extra costs if you want them removed or changed, and this can also be very time consuming.
Slower cash-flow
Buying vacant land has fewer tax incentives than land with other uses. It can also take a long time to see big profits from an investment in land. However, if you can find land with a ranch on it, there won’t be as many improvements needed to be made to the land and you can claim more tax advantages, so overall investment costs will be significantly lower and profits will come sooner.
Conclusion
So as you can see, buying vacant land has many advantages, but also some disadvantages. However, these disadvantages are reduced if the land bought has a ranch on it as you can enjoy more benefits and ensure you get the best value out of your investment. If you have any questions or queries about ranch real estate in Northern California or any of our ranch property listings, do not hesitate to contact us at martinezranchre@gmail.com or by phone, on 530-949-4241.