How to invest in cheap land that will increase in value tomorrow?

Land investment or land investing is the act of buying or selling land for future use, development, or as an investment. Land investments can be considered to be one of the oldest forms of investment.

Land investment has returned (on average) more than 900 percent to investors over the last 20 years, and with a severe scarcity of this natural resource in certain global locations such as the United Kingdom, financial returns for astute investors are expected to be considerably greater.

In this post, we'll look at the specific considerations you should think about before buying property as an investment.

When it comes to assessing the possibility for capital growth, land shares some intriguing characteristics with real estate.

In this section, we'll look at how to evaluate land sites so that you may select the best plots of land that are likely to skyrocket in value rapidly.

The following are the two most important elements to consider while analyzing possible land plots for investment:

1. Placement, Placement, Placement (Did I mention the location?)

When you buy a real estate investment, you will, of course, conduct extensive research on the property's location.

Why? Because the location of real estate affects both its capital appreciation and the rental returns it commands.

While there are no yield concerns in property investing, the location of a block of land will primarily influence its rise in value.

The location of the land will impact its potential of obtaining planning clearances as well as its likelihood of being bid on by a big developer. The location is critical.

 

Here are some important factors to consider when assessing the location value of a parcel of land:

1. Is the site near major rail/road networks and connects two or more established communities? If the response is yes, it is more likely to be granted planning approval and is also more likely to be identified as a possible development site.
2. Is the land easily accessible to gas, power, water, and other utilities? A developer is significantly more likely to construct on a plot that is close to these utility networks. Other amenities may include easy access to sewers.
3. Is the land surrounded by a green belt? This is a government-protected region, and green belt areas can face significantly more difficulties in obtaining planning clearance for development than non-green belt areas.
4. However, owing to the land scarcity situation, many green belt areas are increasingly being permitted to have the property developed - if you're going to acquire green belt land, you might check to see whether another green belt land in the region has been granted planning permission for development.
5. While there is no assurance, this might be a good sign that your proposed land investment will be granted planning clearance.
6. Recognize Town Growth Patterns - A potential land investor must be able to discern the direction in which a town or city is moving.

Investing in a property that is not in the line of this expansion may imply that the land will stay barren for a much longer period before capital gains may be achieved through a bid.

Physical Characteristics of Your Land - While not strictly a location issue, there are several physical characteristics that your proposed land investment will have that may affect its potential for development - for example, the type of soil that your proposed land investment has may affect how it may be used.

Another factor to consider is if the property is on flat terrain or hills.

Locate Towns That Have Been Designated For Homes Development By The Government - We already know that the government is committed to investing billions of pounds in affordable housing.

Purchasing land plots in specified locations designated for house-building is another approach to ensure that you buy land in an area that has a good possibility of receiving planning clearance and, eventually, attracting a developer who will buy it from you.

Make Use Of Government Departments - Contact the councils in the areas where you intend to buy land and inquire about their expansion plans.

Inquire about any new roadways or infrastructure that may be on the horizon, as well as whether any greenbelt areas are going to be developed shortly.

Neighboring Area Affluence - Obviously, the wealthier the area (and surrounding areas) of your land's location, the more valuable it will be.

In Real Estate, discovering "spill-over" locales - these are places that are relatively inexpensive to purchase into yet neighboring property hotspots - is an excellent technique for identifying properties with tremendous potential for capital growth.

What happens is that the value of these spill-over areas rises as those who cannot afford to purchase into the hotspot location are compelled to settle in the spill-over areas. A similar strategy may be used for land investment.landwatch.com

Is your home near any current developments? Land near existing projects is more likely to be identified (and granted planning approval) than land in the middle of undeveloped green belt zones with gorgeous picture-perfect vistas.

How well and at what price do houses/apartments near the land sell? 

If there are residences near the location of your possible property acquisition, you should inquire about how well the land in that area sells.

To find out the average price, look at the most recent sales. This should give you a good idea of how well land in this location might do as an investment.

2. The Land's Probability of Obtaining Planning Permission

If the land you are considering acquiring does not presently have planning approval, you must analyze the possibility of it gaining planning clearance for development.

It is not an exact science to select a property that is likely to gain planning authorization (you need to have deduction skills to identify the land most likely to get permission). Here are a few things to think about:

• Is the property in a greenbelt? If the area is now in the green belt, obtaining planning clearance will be more challenging. However, due to current government ambitions to develop (UK) property in the greenbelt, many green belt areas will still gain planning clearance provided specific requirements are satisfied. Many of these are covered in further detail below.

• Land's Proximity to Areas and Developments That Have Already Obtained Planning Permission - Land that is adjacent to another land in the region that has already received planning permission may be more likely to gain approval for development itself. Property that is not near any developed land or is smack dab in the heart of "prize countryside" is less likely to earn that elusive green light.

• Land Proximity in High-Development Sections - Certain areas of the country have been designated for development. These are regions that the government plans to develop; land in these areas is significantly more likely to receive planning approval; if you inquire about current areas and focus on purchasing land in these areas, you are less likely to wind up with land that is denied development permission.

• Proximity To Land That Is Close To Motorways Vital Utilities - In the last part, we discussed how proximity to utilities and motorways is crucial in terms of land placement. These characteristics are also important in securing planning authorization for the development of the site. A council is significantly more likely to grant authorization to property that has direct access to power, water, gas, and transportation linkages than to land that does not.

• The Need For Housing In The Area - This is related, at least in part, to the land's proximity to regions with high development factors. Land investment in locations where new housing is desperately needed is considerably more likely to yield a timely positive return than land investment in areas where no such need has been recognized (particularly if it is in the green belt).

• Land's Proximity To Existing Towns & Villages - Land that is very close to existing settlements has a far higher chance of obtaining planning clearance. Several economies of scale will allow the council to allow this area to be built - for example, necessary social services such as police, fire, and medical facilities will already be in place.

It's important to realize that after planning clearance is given, the value of land might skyrocket. As a result, when investing in property (either alone or as part of a group), your ability to identify land that is ready for planning permission is critical.

Remember, the land is a non-renewable commodity. There is no "competition" for it (it is a monopoly), and those who invest in the land today may probably reap exceptional returns tomorrow and for a long time to come.