Invest – Should You Invest In Raw Land
- July 8, 2020
- Posted by: Jim Pellerin
- Categories: Control, Educate
So today I want to talk about investing in raw land.
What does that mean? So raw land is just undeveloped land … a piece of land with no building on it. No physical structure on it that would allow you to earn income from.
It’s a piece of land. There is no single-family home on it. There is no commercial building on it.
So, you buy the land and you hold onto it. That’s all you can do with it. Right? If it’s out in the country you might be able to rent it out to farmers, but that’s a whole different thing.
Raw land to me is something you buy that you cannot earn income from what you’re doing with it in its raw state.
The advantage of that is you don’t have any tenants, right? You don’t have anybody to manage. You don’t have anything to do. You just buy it and you sit on it. Usually raw land is a lot cheaper because it has no building. Buildings are a large cost of when you’re purchasing a property. It’s a lot cheaper to purchase.
Why people buy raw land is that they’re buying it with the expectation that they’re going to flip it in sometime in the future, or maybe they’re looking at developing on it. Those are usually the two main reasons why you want to buy raw land.
What might happen though, is maybe something happens to the economy or something happens to the area and the property actually goes down in value. So, you have to hold onto it a lot longer.
Another disadvantage of owning raw land is you have to maintain the costs associated with withholding it. Even though there’s no property, there are still taxes that you’re going to have to pay. And maybe there’s some property services that you have to pay.
So those are the pros and cons of owning raw land.
I never owned raw land because I could never make any money on it.
Right from the start, you have to start paying taxes and possibly insurance. So, I don’t recommend buying raw land. I want to buy something that’s going to start earning income right out of the gate.
So that’s how you would buy raw land.
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