How to Make Tons of Money with Land
When Ray Kinsella walked through the cornfield and heard a voice whispering, “If you build it, he will come,” in the movie Field of Dreams, he was visualizing a baseball diamond on his Iowa field. With the influx of corporations like Toyota and the Dallas Cowboys moving their operations to the Frisco area, I have had an increasing number of people contact me to inquire about purchasing land as an investment for their very own "field of dreams". While many of my clients are investors, it’s important to note that land investments are just as possible for an average family as they are for a savvy investor with an open ended checkbook. In fact, any average person with reasonably good credit can jump into the market and invest in land.
I’m currently working on three different land deals today and have closed on several others for my clients over the past few months. There is a lot of due diligence required not only to purchase a plot of land, but also to make sure my clients can do what they want with it once they close.
Here are a few things I make sure my clients consider before investing in a plot of land:
- What are the roads near the property going to be? Sure, road access is something you definitely need to think about, but what is far more relevant in today’s market is understanding what the road is going to be. Can you expect a small country road leading to the property, or will there be access to a large road like 380 or the tollway in the future?
- Is the land located within actual city limits, ETJ (Extended Territorial Jurisdiction), or the county? This is kind of a big deal. Any land that falls within the city limits must meet the zoning requirements outlined by the city. So, if your "field of dreams" includes horses, goats, or pigs, that may present a problem if the city has limitations on agriculture. In contrast, county land has great benefits – especially with agriculture exemptions, but it may take longer for the property to mature which means a slower return on your investment (ROI).
- What’s the Master Plan? Just because you see a “For Sale” sign on a plot of land that is a private sale doesn’t mean the property isn’t part of a Master Plan. Collin County, for instance, has master plans in place for regional trails, thoroughfares, etc. The city of Celina has a comprehensive plan in place that includes goals and policies for land use. See where I'm going with this? It’s important to understand how the land you are interested in fits into the grand plan.
- Does the land have access to the municipal water supply and utilities? If the plot of land isn’t on a city sewer system, you’ll need to look into whether or not it is possible to drill to access water below the surface with a well. Also, will it be possible to bring in utilities in the future? These may seem like the biggest issues you should be concerned about, but that is what an average realtor with less experience will focus on.
There are a lot of great reasons to invest in land, but you need a Realtor? who understands and is willing to do the due diligence necessary to assure your investment will get you the greatest return in the future.
Bottom line: Now is a GREAT time to purchase land as an investment. In fact, with an estimated 400% growth over the next 4 years, if you have the means, why wouldn’t you?
If you are even considering investing in a rental property, avoid the headaches that come with maintenance, taxes and tenants. Instead, think about becoming a land owner and with an Agriculture Exemption, your tax liability could be as little as $50 a year as compared to $10,000 for a similarly valued home. Imagine an investment with minimal to no maintenance that does nothing but increase in value over time - - that is one heck of a "field of dreams" that can become your reality.
Ron Lyons specializes in individual and commercial land deals, as well as representing both sellers and buyers of residential properties. For more information, or if you’re interested in investing in land in N. Texas, please contact him at [email protected] or (214)783-5440.