In the real estate, the entire buzz is usually all about how to
invest in the rental properties, buy & holed properties or commercial
properties to start earning right away. But, there is another way, which is
often overlooked by the investors who intend to earn money with a peace of
mind. This investment option is about purchasing a vacant land. There are a lot
of ways you can use this land to earn the money through real estate. However,
there are some disadvantages too that are related to this investment.
In this article, we are going to mention both pros and cons
of investing in a vacant land.
Pros
Opportunity to get the most out of your investment
The first and foremost advantage of investing in vacant land
is that you get freedom to turn your investment into a profit generating
property in way you want. You may have to do a bit of research in order to find
out the potentials of different properties in the area, but it’s the very
opportunity for you to get creative with the type of building you want to
construct.
Direct ownership
The purchase of vacant land usually involves cash payment,
which means you will direct ownership of the land you purchase. Besides the
immediate freedom that you get for building the property of your desired type,
you get peace of mind that you are not going to have to rush for making any
further payments.
Less maintenance
While you are managing a rental or commercial property,
property maintenance would be one of your top concerns. For instance, you may
have to hurry for fixing the features like plumbing, heating system, water line
and so on. On the other hand, you will not have immediately worry about these
issues after buying a vacant land.
Cons
Difficult financing
Traditional financing options don’t work with the purchase
of vacant land. So, when you purchase a land and build something on it, you are
actually spending your own money that you would raise after a lot of hardships.
As a result, you may not be able to quickly earn the profit until you get the
property sold out.
Few tax advantages
Although, there are certain improvements that that you
depreciate while having a vacant land, there are essentially no structures on
your land that you can depreciate. Thus, you would be left with little tax
advantage as compared to the advantage that you can get by having a building.
Furthermore, you will not be able to enjoy any mortgage interest deduction.
Permits and approvals that you may require
Although, you get a lot of options to build the type of
property you want, you would need to get approval from township. The township
will then analyze you property to determine whether or not your property is
appropriately zoned for the type of construction you want to start. Furthermore,
the time elapsed between the time of application and time of approval may also
vary.
