There are many factors to consider before investing in land and you will also have to take into account how the bank will assess your loan application.
Compared to other investments, land doesn’t require much of
your involvement and can be a long term passive investment.
It may suit investors with a limited budget, who can buy now
and build or develop later.
Investing in land is usually high risk for small investors
because of the low chances of cash flow and a fair rate of return.
You can invest in land and hold onto it until it goes up in
value or hand it over to a developer or even develop it yourself.
You can also rent out vacant land to a business or
household, turn it into a parking lot or rent it to nearby businesses.
Here are a few things to take into consideration:
·
If land is on a Bank’s list of postcode
restrictions, you may not qualify for a loan.
·
Large blocks, slightly tilted or with a ravine,
are harder to develop and therefore sell.
·
Banks require the land to have direct access
using an all weather road and the land must have water and sewerage services or
septic tanks
·
Raw land is not a good choice if you want to
sell for a quick profit because of all the additional development costs.
·
If land is cheap, it may have been landfill in
the past or have other environmental contaminations.
Want to speak to our property strategist about your next investment?
Contact us @ propertysales@realrenta.com
Need a property loan?
Contact us @ propertyloans@realrenta.com
Jason Gwerder
Monday, 7 October 2019
