Land Property Types: Which Type is the Best for your Investment?

Traditional, tangible properties might yield a high return on investment, but it can also come with substantial upfront and recurring costs. However, the distinct advantage of not having to leave your home or put on clothes to begin investing is another benefit of these alternative land investments. Several factors, including the investor’s objectives and risk tolerance, as well as the state of the local land market, will determine the best type of land property to invest in.

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Most common types of land properties are:

Residential land

Residential land can be zoned for single-family homes, multi-family homes, or planned communities. Residential land can be a profitable investment if you intend to develop it or if you expect the value of the land to rise as the surrounding area develops.

A residential investment has not only produced the best market growth over the last few decades, but it has also provided the highest level of rental consistency. Both of these benefits are available solely through the home market.

Commercial land

This type of land is zoned for business or industrial use and can include retail centers, office parks, and warehouses. Commercial land can be a good investment if you plan to develop the property or if you expect the area to grow and attract more businesses. At a later date, a commercial land investment can be built independently. Use this when your equity and cash flow are both healthy.

Similar to residential land, commercial land offers its owner the ability to structure an almost infinite number of land development options to fit their financial and time constraints, which makes it a viable entry point into investing.

Agricultural land

This type of land comprises farms, ranches, orchards, and vineyards. If you want to utilize the property for farming or raising cattle, or if you think its value will increase in pace with the need for food throughout the world, purchasing agricultural land may be a sensible investment.

Agriculture or farm land has a long history of providing consistent returns, which is why more investors are choosing it as an investment option.

Recreational land

This can include land that is suitable for hunting, fishing, camping, or other outdoor activities. Recreational land can be a good investment if you’re interested in using the land for personal enjoyment, or if you expect the value of the land to appreciate as more people seek out outdoor activities.

When maintained properly, recreational property can even improve the neighborhood, increasing interest and property values. If you decide to sell the land in the future, you can make a substantial profit!

Timberland

The main purpose of this type of property is to grow trees that can be used to make wood products. If you are interested in the wood products industry or believe that demand will increase, timberland may be a wise investment too.

Timberland is an excellent alternative investment because it provides a hedge against inflation as well as the opportunity to diversify a stock and fixed-income portfolio. Because they are not linked to traditional financial markets, the value of both the land and timber components rises over time.

What are common investment benefits of different land types?

Although each land has its characteristics and benefits when it comes to investment, there are common advantages that reassures you when investing in any land type.

• High rental revenue potential

Over time, lands can generate a sizable rental income for the owner.

• Appreciation rate

The value of any land may rise over time if local real estate conditions improve and land demand rises.

• Capital gains

Buying, selling, or building over your land may result in value increase, which can yield a sizable return on investment.

• Diversification

Investing in lands allows you to diversify your investment portfolio and spread your risk across multiple asset classes.

• Long-term investment

Land investment is regarded as a long-term investment, because lands generate consistent cash flow and appreciate in value over time.

How to choose the best land for your investment?

Ultimately, the best type of land for investment is determined by your personal investment objectives and risk tolerance. It is also critical to consider the land’s location, zoning, and infrastructure, as these factors affect its growth potential. Other factors include mineral deposits, flood zones, and so on. Before making a decision, research the local real estate market and speak with a real estate professional to get a sense of what type of land is in demand and what type of land would be the best fit for your investment objectives.

Discover land investment opportunities through Amman Vision for Investment and Development: www.ammanvision.jo/investment-opportunities

Resources: https://www.investopedia.com/articles/investing/050614/there-are-more-ways-invest-land-you-think.asp

https://www.futureforestproperties.com/3-reasons-why-you-should-invest-in-recreational-land/

https://corporatefinanceinstitute.com/resources/wealth-management/timberland/