Unearthing Opportunity: Why Real Estate Investors Should Be Investing in Land

Early settlers and pioneers in the United States were in search of the freedom, adventure, and prosperity that this new area offered them. Similarly, pioneering investors are always seeking freedom, adventure, and (especially) prosperity through their real estate investments - whether that comes from live event venues, laundromats, or the land that is underneath it all.

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But if you're not interested in agriculture, what makes land a good investment?

1. They sure aren't making anymore! Land is a tangible asset with inherent value. Purchasing in areas that have positive population and job creation rates will be the baseline for appreciating land values. However, rural land can hold its value for other reasons (see below #4).

2. No maintenance required. Investing in land affords you greater control over your assets. Unlike rental properties which require ongoing maintenance and management, land can be a hands-off investment with minimal operational overhead, which simplifies your overall strategy.

3. The potential for appreciation is high. While the land itself might not generate income like rental properties or commercial buildings can, it has the potential for substantial appreciation. Factors such as population growth, urbanization, infrastructure development, and rezoning can significantly increase the value of land. If you don't need or want cash flow due to the taxes you would have to pay, a land investment with upside in capital gains may be an ideal part of your investing strategy.

4. Land diversifies your investment avenues. Including land as part of your real estate portfolio opens up a plethora of avenues for potential diversification. Whether it's agricultural land, undeveloped lots, or parcels with good development potential - investors have the flexibility to choose assets that align with their risk tolerance, investment horizon, and financial goals. Furthermore, land investments can span various geographic regions easier than physical real estate investments, allowing investors to hedge against local market downturns and capitalize on emerging opportunities elsewhere. Land is easier to buy in areas where you aren't local, as there is no maintenance to facilitate and less concern about market positioning.

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Money-Generating Activities Associated with Land

• Leasing agricultural ground to a farmer - Lease rates vary depending on the quality of the soil, but you can expect $350-1,000 per acre, per year.

• Leasing ground to a solar company - This has become increasingly common in Pennsylvania due to the Net Metering laws. Average lease payments are $2,000-3,000.

• Mineral rights - Much of rural Pennsylvania has led the way for natural gas production in America. The value of mineral, oil, and gas rights can be substantial for land owners in certain areas.

• Commercial ground - Leasing ground sites to high-profile retail users is relatively common. Expect lease rates of $80,000-130,000 per year for pad sites of 1-2+ acres.

• Truck parking - Do you see all of the tractor trailers on the roads? They need somewhere to sit when they're not in transit. Trailer parking can bring $95-150 per trailer, per month. Proximity to warehousing and highways is essential for this strategy to work.

• Waterfront land - Parcels along a desirable waterfront can be leased to homeowners for build-to-suit properties on long-term assignable leases. Rates can run from several hundred per month to several thousand, depending on the desirability of the location.

• Land for hunting - All the hunters who pay to hunt on someone else's land understand immediately why this makes sense. There's a large community of hunters nationwide who would love to find new land to use, and will pay big bucks to hunt there. You know who you are...

• Timber harvesting - Many kinds of hardwoods present substantial value when harvested. That's one less step for a future user to develop your site.

• Future development - We saved the best for last, as this could be a completely separate discussion. If you purchase in the path of progress, and have the patience of a tortoise, you will be rewarded in the years to come. If this is your goal, seek guidance on the right locations from qualified professionals and target areas that are business-friendly. This will encourage development overall and ensure that your land is positioned correctly in the future.

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By incorporating land into your real estate investing strategy, you can unearth a wealth of opportunities and solidify your financial footing for generations to come.

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Many of our clients are looking to benefit from land investing but are concerned about the risk of losing value. We provide key insights from our expansive experience in the market, so all you need to do is collect the checks and brag about your deal.

Contact our land investment experts today start the conversion.

Naomi Brown, CCIM

Principal & Senior Advisor

Broker of Record

Multifamily & Land Specialist

(o) 717.820.1127

(c) 717.819.2825

[email protected]

CAPSTONE COMMERCIAL

205 W Caracas Ave | Hershey, PA 17033