Is A Lot A Secure Investment At The Current Time?
Jan 29, 2010 Real Estate
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Buying land used to be the most likely and preferred purchase that real estate investors made, but in recent years many have started to doubt the safety of land purchases. There are a few guidelines for investing in land and they are easy to remember and apply.
The first rule to remember is that if you own real estate the “right way” then it is always a safe and good investment. By keeping the bank out of the equation, you will maintain control over your own situation and be able to make decisions based on logic, instead of fear. The likelihood of facing a foreclosure or being dispossessed of your property in any other way is greatly diminished when you own it free and clear. I realize this is not an option for most people, so maybe consider it as an ideal more than anything else. For those whom this strategy is a possible or realistic one, real estate is the safest place to store your cash, and avoid being taxed on it.
Besides the fact that when you buy a home outright, you can always rent it and you will have a nice littler income generated from it. To use your income to buy real estate is a great way to put off tax liability you may be facing and to build a collection of performing assets that may fund your early retirement. If you use the tax laws in the most advantageous manner possible, you can simply take your pre-tax income and spend it on real estate, which will offset your tax liability on your net sheet. I do recommend sitting down with your accountant to outline the exact plan to do this as your first step.
Buying building lots for investments can be more risky because their is an over abundance of inventory in most U.S. markets, due to overzealous lenders and developers during the boom earlier in the decade. After this inventory gets absorbed, building lots will again be a very good investment. With the long term in your plans, buying building lots and holding them is a great idea, and only if you can do it without involving the bank, otherwise stay away from them for a few more years.
Using a note from the original land owner works better than using a mortgage due to the fact that you are dealing with a person, not a corporation. There are other options for getting rentals from the land you own, like doing joint ventures with a local builder, so keep your eyes open and make sure to cover your own assets in all of your business dealings.
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