Is land a good investment?

Hello Frank, Land can be a smart lower cost way into real estate when a second home isn't in the budget. The tradeoff is patience, no income while you hold it, and you'll still owe property taxes the whole time, but you avoid a mortgage payment and maintenance costs a house would bring. What really drives whether it pays off is location, land near growing areas or future development tends to appreciate steadily, while land in stagnant areas can sit flat for years. Since you're leaning toward selling down the road rather than building, buying in a spot with strong resale demand matters more than buildability specifically. It's a reasonable, low maintenance way to get exposure to real estate without the bigger commitment a second home requires.

Hello Frank, Land can be a smart lower cost way into real estate when a second home isn't in the budget. The tradeoff is patience, no income while you hold it, and you'll still owe property taxes the whole time, but you avoid a mortgage payment and maintenance costs a house would bring. What really drives whether it pays off is location, land near growing areas or future development tends to appreciate steadily, while land in stagnant areas can sit flat for years. Since you're leaning toward selling down the road rather than building, buying in a spot with strong resale demand matters more than buildability specifically. It's a reasonable, low maintenance way to get exposure to real estate without the bigger commitment a second home requires.

Land is the only real estate that costs you money every year and pays you nothing while you wait. That is the whole thesis, and everything else follows from it. A rental property has tenants covering the mortgage and taxes. Land has no tenants. You pay property taxes and insurance out of pocket, every year, and the only return you ever get is at sale. So a purchase that looks cheap on day one is actually a commitment to fund carrying costs for however many years until you sell. That does not make it a bad investment. It makes it a bet with a longer fuse and no income to smooth the ride. Here is what I would want you to know before you write an offer, and none of it is in this thread yet. Financing is different, and it surprises people. Raw land generally requires a much larger down payment, carries a higher rate, and comes with a shorter term than a house mortgage. It is usually a portfolio product from a local bank or credit union rather than something sold to Fannie or Freddie. So before you shop parcels, call two local banks in that county and ask what they will actually do on unimproved land. That conversation will reshape your budget. There is no depreciation. This is the big tax difference from a rental and almost nobody thinks about it. Land is not depreciable, so you get none of the paper deduction that makes rental property attractive. Your carrying costs may or may not be deductible depending on your situation, which is a CPA question, not mine. Then the buildability questions, because you mentioned maybe building someday. That "maybe" is worth a lot of money and you should price it now, not later: Is there legal access? Not a dirt road people use, a recorded legal right of access. Landlocked parcels and unrecorded easements are more common than you would think, and it is exactly the kind of thing that surfaces in title work. Will it perc? If there is no sewer, you need a percolation test showing the soil supports a septic system. A parcel that will not perc may be unbuildable for a house, which changes what it is worth to everyone, not just you. What does it cost to bring utilities in? Power, water, and any needed road. On a rural parcel that can be a very large number, and sellers rarely volunteer it. What is the zoning today, and what would you actually be allowed to build? Ask the county, not the listing agent. If you are near the shoreline, ask specifically about setbacks, wetlands, and any shoreline or high-risk erosion regulations. That is the kind of constraint that makes a beautiful parcel unbuildable. Do all of that during a due diligence period, in writing, with the right to cancel. Land contracts should have a longer investigation window than a house, because there is more that can be wrong and less that is visible. Two smaller things worth knowing. Ask the county assessor whether the parcel qualifies for any agricultural or conservation assessment that lowers the tax bill, and what the recapture is if you later change use. And if you ever sell at a gain and want to roll into other investment property, ask a CPA about a 1031 exchange, since investment land can generally qualify as like kind with other US investment real property. My honest read on your framing. You said you cannot afford a second home, and that land is the more affordable path to eventually having one. That is a reasonable instinct, but run the arithmetic before you commit: purchase price, plus financing at land terms, plus years of taxes and insurance, plus the eventual cost of access and utilities and a build. Compare that to simply saving toward the second home. Sometimes land wins clearly. Sometimes it turns out to be a more expensive route to the same place, with the money locked up in something illiquid that you cannot rent out in the meantime. I am a real estate professional, not a CPA, an attorney or a financial advisor, and I am not going to tell you whether this fits your finances. My name is Zoltan Peresztegi and I work in Los Angeles, the South Bay and on the Palos Verdes Peninsula, so I am not your Michigan agent. If you want an introduction to an agent in the Union Pier area who actually does land rather than just houses, message me and I will find you one. That distinction matters more on land than on anything else in this business. Zoltan

Buying land can be a good long-term investment, especially in an area with strong growth potential and limited available land. However, unlike a rental property, vacant land usually doesn't generate income while you own it. Before purchasing, make sure to research zoning, utility availability, road access, environmental restrictions, property taxes, and future development plans. These factors can significantly impact the property's value and your ability to build later. If your goal is long-term appreciation and you're comfortable holding the property without rental income, land can be a solid investment. Just be sure to do your due diligence and understand all the carrying costs before making an offer. Juan Picos Realtor | JohnHart Real Estate

Frank, this is completely dependent on location and zoning, there is no one size fits all answer to this unfortunately. Keith Jean-Pierre Managing Principal The Dapper Agents Real Estate Operations in ALL 50 States

Land can be a good investment but it requires patience and the right location. It produces no income, you still owe property taxes every year, and it is harder to finance than a regular home purchase. Go in knowing you are holding a passive asset that costs you something every year until you sell or build. Location is everything with land. In the path of growth it can appreciate significantly. In a stagnant area it can sit flat for decades. Before you buy, research what is happening around the parcel, nearby development, infrastructure plans, and zoning trends. For your situation it sounds like a reasonable entry point into real estate if the price is right and the carrying costs are manageable. Just make sure the land is buildable if that is part of the long term plan, and confirm utilities, access, and any restrictions before you close.

Land can be a strong long-term investment, especially in growth areas, but it typically does not produce cash flow and may carry holding costs like taxes and maintenance.

Great question! Historically yes land is a good investment over the long term. Outside of booming market bubbles, land, and real estate give stability to any portfolio of investments. Chat with your CPA on tax advantages and the affordability of the land you are looking to purchase.

Do your home work. Not all land is buildable. I believe buying land is a huge value when you go about 30 miles out from where everything is happening...find land...buy it...hold it...and wait for development to catch up to it in about 10 years or so...then sell it for a mint! BUT...if you buy bad..its just not gonna go well. Go to your local zoning commission at your government office and ask what their plan is for the future...they will tell you where commerce is heading and go there.

ARe you able to pay the taxes on the property while you hold onto it and wait to build? If you are buying it just to see it increase in value, that is something that a local professional REALTOR can answer for you. In many cases, I do not see huge returns on investment of land by itself to hold and sell for more at a later date unless it is near an area that is in development or has growth potential near it. So ask a local REALTOR about what you are specifically wanting to accomplish. They will be able to give you better direction on your local goals.

Yes but depends on the area as well.

Hi, land is a good investment if it is in a good location. You want to think about what type of investment property as well. If its going to be used for a multiunit/ apartment complex, you want it to be in a busier residential location. Make sure there are businesses walking distance away. For commercial property, you want it to be on the main road. Make sure the building stands out. Also most importantly, make sure you get the guidelines for the land if you do end up purchasing. Make sure it is eligible for your intended use.