Any type of investment carries with it a measure of risk. A clear understanding of the risks associated with any type of investment is vital in ensuring that the investor does not lose their capital. Acquisition of land as an investment may be considered a safer investment as compared to other types of investment like gold or stocks. However, in order to ensure the veracity of the investment, the investor should consider a number of factors concerning the anticipated land investment.
A vital factor that one should consider is the location of the land in question. Locality of the land investment will determine the appreciation or depreciation of its value. Generally, land appreciates in almost all places around the world but, however, in areas racked with violence or in poor neighborhoods, the land may depreciate or otherwise appreciate at a very slow pace. A good land investment would be located in a well to do neighborhood preferably with major developments planned for the area in future.
A second factor that an investor should consider before investing in land is the lease and the ownership contract of that property. Several countries and states lease out land to individuals for a period of time. After the expiry of said lease, the land may be reacquired or the lease extended. Knowing the amount of lease time the property still has will enable an investor make the right investment decision. Additionally, the politics of the concerned area will also go a long way in influencing the merits of the land investment.
A final point that one may consider before acquiring a land as an investment is the potential use of the land. Knowing the potential that the land has and what it can be used for will guide the investor in making the right purchase decisions. Additionally, the investor may put the land in use as they await the inevitable appreciation of the land and thereby make even more profit from it.
While real estate and especially land is a good choice of investment, making bad purchase decisions may leave an investor with a depreciating piece of property that has no value to the owner. Thus, before making any land investment, the investor must ensure that the land in question is set to continue appreciating and, therefore, make good returns on the investment.