The point of this article is pretty simple. Buying land is a terrible investment strategy. If you are interested in real estate, then this is not the way to go. I’m sure you have heard numerous stories from friends and family about that great piece of land they bought on a limb and how the real estate broker told them the other day it was worth seven times what it used to be. They probably aren’t lying either, but this article is not about that. This article is about buying land as an investment strategy when you go into real estate. To understand why it’s bad let’s go over some business basics first.
When you go into any business the key to surviving is pretty simple. Keep your revenues above you expenses. This is so simple a kindergartner could understand it right? So, why is it that people think buying land is smart? Some of you may ask “would you say that about stocks?” No, I wouldn’t say that about stocks and here in lies the key difference. Stocks pay you something called a dividend. It’s either a quarterly or annual payment you get from each share. Getting the picture yet? Besides that, stocks don’t cost you property tax and other expenses each month.
To break it down simply, when you buy a barren piece of property with a strategy of making money in five or ten years by selling it you neglect the types of expenses that it can cause. The biggest one is property tax. Not to mention if you choose not to pay cash and get a loan. You directly cutting into your monthly cash flow! It’s an insane strategy if you ask me.
Having said all of that I admit there are people out there who are seasoned and RICH investors who are buying land and make a lot of money. These people are experts and they have the capital to handle buying land as an investment strategy. For everyone else looking to invest in real estate buying land is not a smart move. That’s why I advocate an entirely different strategy to make money in real estate. You can learn more about my full guide by going to BlueCollarRealEstate.com. Good luck fellow real estate investors!
