Tuesday, 30 April 2013
How can you make money from land?
Whilst nothing is guaranteed, carefully chosen land can be an excellent investment. Here’s how it works for private investors:
• An investment company researches land that’s likely to be developed
• The company buys a large piece of this type of land, currently without development permission
• The land is sub-divided into smaller parcels
• Private investors buy parcels of land for as little as £5,000
• Purchase includes freehold ownership and the investor’s name on the deeds
• Investor can sell the land at any time
• Land will probably increase in value over time
• Land will substantially increase in value if planning permission is granted
The relative affordability of this land means that it is now a serious investment opportunity for private investors. The land is always bought without any planning permission, which is why it is cheaper, and although there are no guarantees about the profits to be made, the investment company has usually researched the area including the numbers of new houses needed and the availability of other land locally before choosing which land to buy. This means that the company will not buy land unless it is very sure that it will be granted development permission at some time in the future.
How can you make more money?
A prudent investor may put some of the money generated by their first “land deal” into new pieces of land. This is a medium-term investment, so returns can come in 5-10 years. This means that with careful planning, you could re-invest your profits into a number of different parcels of land, making more money when permissions are granted.
A good land agent can talk you through your first purchase and help you to identify plots of land that fall within your criteria.