Is land a good investment?

Yes, land can be an excellent investment, but it is an entirely different type of investment from a rental property.

You are correct in your thinking. A rental property is an income-producing asset (it's designed to create monthly cash flow). Raw land is a non-income-producing, speculative asset. Its entire investment value is based on appreciation.

As you consider this, here are the general pros and cons.

Land as an Investment: The Pros and Cons
The "Pros" (Why it's a good idea)
Affordable Entry Point: It's a way to get into the real estate market with significantly less capital than buying a home.

Low Maintenance: This is a major advantage. You don't have to worry about tenants, toilets, or roof leaks.

A "Forced" Savings Plan: By paying down the land, you are building equity in a tangible asset.

Finite Resource: They aren't making any more of it. In an area with population growth, land will almost always become more valuable over time.

Flexibility: When you are finally ready to build, you can build the exact home you want.

The "Cons" & Risks (What you must know)
This is the most critical part. Unlike a rental, where a tenant helps pay your expenses, land has carrying costs—meaning it will cost you money every month out of your own pocket just to own it.

Negative Cash Flow: You must be financially prepared to pay these costs, potentially for years, without any income to offset them:

Property Taxes: You will pay property taxes every year.

Financing: Getting a loan for raw land is very different from a home mortgage. Lenders typically require larger down payments (often 20-50%) and may charge higher interest rates because the land itself isn't generating income.

Liability Insurance: You'll want this in case someone gets injured on your property.

HOA/POA Fees: If the land is in a community or subdivision, you'll likely have annual dues.

It is "Illiquid": This is a key financial term. "Illiquid" means it can be difficult to sell quickly. The market for a specific 3-bed, 2-bath house is massive. The market for a specific plot of vacant land is much, much smaller. You can't just "cash out" in a week if you need the money.

Intensive Due Diligence is Required: This is where investors get into trouble. You cannot just buy a pretty piece of land. Before you close, you must verify that you can legally and physically build on it.

Zoning: Is it zoned for residential use?

Utilities: How will you get power, water, and internet? Are utilities at the street, or will you have to pay thousands to have them run?

Sewer vs. Septic: If there's no public sewer, you need a septic system. This requires a "perc test" (percolation test) to see if the soil can absorb water. If the land fails a perc test, it could be unbuildable and worthless.

Access: Does the property have legal, year-round road access? A "landlocked" parcel is a major problem.

Environmental: Is it on a flood plain? Are there protected wetlands? Is the topography too steep to build on affordably?

My Professional Advice
Your strategy is sound if you go in with your eyes open.

Land is a "buy and wait" investment. It's not a "get rich quick" plan. It's a fantastic way to secure your future build site and capture appreciation, as long as you can comfortably afford the carrying costs for the long haul.

The most important step you can take is to partner with a local agent who specializes in land. This is not the same as a standard residential agent. A land specialist will know the specific zoning laws, soil conditions, and development costs in that county and can guide you through the critical due diligence process.

s Land a Good Investment?
Investing in land can be a highly strategic and profitable real estate decision, but it depends on several factors, including location, market trends, and long-term appreciation potential. Here’s what you need to consider before purchasing land as an investment:

1. Appreciation Potential
Land is a finite resource, and in high-demand areas, it tends to appreciate over time. If you buy in a growing market with strong infrastructure development, you could see significant gains. Areas near booming metropolitan regions, vacation destinations, or future commercial projects often yield the highest returns.

2. Lower Holding Costs
Compared to rental properties, land has minimal maintenance costs, no tenant issues, and lower property taxes and insurance (depending on zoning and location). This makes it a relatively low-risk, long-term investment.

3. Future Development Potential
Since your goal is to eventually build a home, securing the right lot now can lock in lower prices before land values rise. Additionally, if zoning allows, you could explore short-term rental options such as RV pads, tiny homes, or glamping sites to generate some income while you wait to build.

4. Market Liquidity & Exit Strategy
Unlike rental properties, land can sometimes take longer to sell, especially if it’s in a rural or undeveloped area. However, if you buy in a desirable location with growing demand, your resale value could be substantial, allowing you to profit when the time is right.

5. Key Considerations Before Buying Land
Zoning and Land Use Regulations – Ensure it aligns with your future building plans.
Utility Access – Check for water, electricity, and sewage availability.
Market Growth Trends – Research areas with increasing property values.
Property Taxes & HOA Fees – Factor in annual costs.
Final Verdict: Is Land a Good Investment?
Yes, buying land can be a smart real estate investment—especially if you choose a location with high appreciation potential. While it won’t generate rental income immediately, it serves as a long-term wealth-building asset with low holding costs and future development opportunities. If your budget doesn’t currently allow for a second home, land investment is a strategic stepping stone toward that goal.

Would you like help analyzing specific land opportunities in your target area?