Vacant land is not only one of the most overlooked of all real estate investment opportunities, but it is also one of the least understood. Many people think investing in land – buying and selling – is a weak investment and that it is pointless or just plain old boring.
The most common misconception is that it just sits there and doesn’t actually produce income. And that’s a shame, really, because there are many reasons why buying vacant land in Detroit is a wise investment.
Top 4 Reasons Why Buying Vacant Land in Detroit Is a Wise Investment
1. Low Competition
With traditional real estate investing, you generally have to deal with a lot of stiff competition for available properties at the right price. After many hours of research and poring over listings, you’ll then be bidding against many other investors vying for those very same properties. It’s not like that with vacant land, though.
Most investors are fixated on single- and multi-family housing and commercial properties, usually never even considering investing in vacant land. So with land there is very little competition. And this low bidding competition (demand) generally means lower prices – a huge advantage for you.
2. Hands-Off Investment
Of all the reasons why buying vacant land is a wise investment in Detroit, this one is often overlooked, but should actually have the most appeal to investors. Compared to, say, buying, rehabbing, and flipping houses, buying and selling land is a breeze.
Unlike with houses, you won’t have to do any remodeling, renovating, or refurbishing. And you won’t have the hassle of dealing with tenants and their many problems and complaints. The land just sits there . . . ready for someone to buy it and build on it.
3. Land Owners = Motivated Sellers
By definition, vacant land owners in Detroit are absentee landlords. This means that landowners don’t have the emotional attachment to the property that homeowners often do – an attachment that can drive the sale price up unreasonably.
Further, the land is oftentimes costing the owners money. They aren’t producing any income with it, just paying yearly property taxes. As a result, they are motivated to sell, usually for a very low price.
4. Greater Income Potential
Obviously, the only reason for investing in anything is to make money. But what many people don’t realize is that investing in the vacant land has the potential for a greater ROI than more traditional real estate investing avenues. There are two reasons: the power of owner financing and the long-term benefits.
Owner Financing – In most cases, banks and other lenders are fairly reluctant to lend money for the purchase of vacant land. The main reason is that if the borrower defaults, the bank will have a harder time re-selling the repossessed land than it would a house. And this opens the door for the landowner to provide owner financing to a buyer.
If you have purchased vacant land and then want to sell it on an owner-finance basis, you can easily charge higher-than-market interest rates. And buyers will often gladly accept a higher interest rate because they want the land and can’t get other financing. So you have the recurring passive income of rental properties without the many headaches.
Long-term Benefits – With land, the principle of scarcity is observably in operation. They aren’t making any more of it – for new neighborhoods or malls or whatever – so over the long haul it becomes more and more valuable. Think of it this way: it’s a safe place to park your extra cash and just watch it inexorably grow over the years.
If these 4 reasons why buying vacant land is a wise investment in Detroit aren’t enough to convince you, just consider this: investing in vacant land can be one of the most effective and powerful strategies for building a real estate investment business.