When dealing with demanding tenant will spend time and money to keep the rental property that does not appeal to you, you may still be able to enjoy some of the benefits of real estate ownership by buying a plot of land. The principle is quite simple. You’re just looking for a piece of land in a location that is in the path of the construction boom came, remained until the peak of prices and then sell them for huge profits. It sounds great and is really easy to do on paper but in reality could play out quite differently. It’s a game to think about the plan.
First of all even if you have the money to buy property without borrowing, the absence of fault, the mortgage payment does not mean you will not have to deal with the cost. At least there will be taxes to pay and depending on where you buy.
If you have a mortgage to pay, your interest rate may be higher than it would be for residential buildings because many banks consider you a higher risk borrower if you only buy land. Also the depreciation tax write-offs are usually associated with building simply will not apply here because the land is not depreciated.
Of course this problem, you will not be able to generate any income from the land, so that every expenditure you incur should be borne by other income producing investments or worse. Unless buying farmland.
Now hold your money in the ground to offset the effects of inflation when you set aside money to finance the higher education of your children is a good plan and can work very well, but, if your main goal is to develop the land later prepared for a set of obstacles. Because many risks and pitfalls that the developer exposes himself when erect buildings on raw land, you may find that many of the bank you approached to finance your project will be reluctant to lend money. At best you can expect to pay higher fees and interest rates. The last thing they want is to take the matter and the obligations of foreclosed properties that are still in development.
To make the land profitable investment you almost have to be able to predict the future. Now this may not sound as you can see the trend of development in the last year where it will go. If the land you are looking to buy is in the path of progress then you might just have a good investment in your hand.
This is not something that is easy to find though. And although many first time buyers are lucky, even with a lot of knowledge and experience is very easy to get this error. The growth of the market may fail to achieve the expected level and the economic climate can change. So if you are planning to invest in land in the country you will be advised to proceed with caution.