If you’ve ever thought about investing in real estate, you’ve probably considered residential, commercial multifamily, offices, hotels, or even industrial properties. But what about land with no property built on it? Although land is becoming more and more scarce, there are still multiple options when it comes to investing in land property. In this article, we’ll look at what types of land properties exist, explain why they present quality investments, examine financing options, and talk about where you can start looking to purchase land. Let’s dive in! Land Types There are 3 types of land property we can look at to understand how they operate and their investment potential. Parking Lots In developed and developing cities and towns, space and property values are ever-increasing. In these areas, parking lots prove to be a profitable investment. Many investors are interested in them over traditional forms of real estate. Parking lots generate revenue flow through their use. In premium locations (downtown sectors and highly populated areas), parking lot owners charge for their use. These properties can exist in a few different forms, from surface-level parking lots to multilevel garages. While unassuming at first glance, parking lot properties have a low cost of entry, and they present a great ROI for minimal work. Vacant Land Vacant land is simply an empty space with no real future intentions placed upon it. These plots of land are very difficult to find in urban and developed areas, but they are often more readily available in less developed, rural locations. This type of property is a blank slate for whatever the investor chooses. It could be rented out and maintained for open space, outdoor events, it could be used to harvest natural resources, or even used for farming. Despite being the type of land property with the lowest immediate cash flow generation, vacant land accrues value immensely. Keep it well-maintained, and it will prove to be a great investment over time. You must ask yourself one big question before you plan to purchase vacant land properties: why is the land vacant? Is the previous owner simply selling the land and moving on to another investment? Or is the land difficult to manage? Is there no market for open land where you are planning to purchase it? Your answer will reveal any red flags about the property and ultimately let you decide if that specific plot of vacant land is a good investment. Land for Construction Land properties for construction are open plots of land that plan to be utilized for property and real estate development (residential or commercial). Like other land property investments, investors should look toward rural areas for available land to purchase. However, good deals on land used for development in cities can present a profitable investment. Additionally, land for construction presents a wide range of use cases, and it’s often cheaper than buying already-established property. Compared to all land property, land for construction also presents the highest potential gains for investors. A good marketing strategy will let you, as an investor, attract customers who want to build on the property. Deals can easily amount to millions of dollars, depending on the size of the land and the ease of development. Keep in mind, however, that the barrier to entry for these properties tends to be the highest of all land properties. Preparing land for construction also takes work like grading, zoning, These processes cost money. Why Invest in Land Property Land properties are fantastic investment opportunities, given a proper understanding of market demand in a given area. On a macro level, a stronger economy means land will accrue more value. Here are some reasons you should consider investing in land properties: Low maintenance and appreciation Unlike commercial or residential properties, land property requires very little maintenance. The most you’re required to do as a landlord is make sure the property is clean and suitable for its purpose. With proper maintenance and an economy that supports demand, land properties have the potential to greatly appreciate over many years, sometimes more so than other types of property. This is even more true when considering property meant for construction. Big buyers looking to expand a business or build real estate will often pay premiums to be able to utilize the land, which gives you significant revenue flow. Scarcity of available properties Available property is becoming harder and harder to come by. As time goes on—and as development projects use land in both urban and rural areas—land will become more expensive. That means investing now is a good move! Easy entry for property investment Out of all types of property, land property is often one of the most accessible for beginning investors. Land properties usually cost a fraction of residential or commercial properties, unless the land is located in a highly-populated area where demand drives prices. This inexpensive quality makes land property attractive, especially for those with limited financing options or capital. Financing Options for Land Properties It’s perfectly fine if you lack the necessary capital and still wish to invest in land properties—many financing options exist to help you! Here are some financing options that you can consider when purchasing your land property. Conventional Bank Loans When issuing conventional bank loans, banks check eligibility with your credit score and history. Having a portfolio of your owned properties helps to secure this type of loan; however, it isn’t necessary and these conventional loans are typically available to most investors. With these loans, you’ll find amortization periods between 10-30 years. Banks will cover a very large amount of the cost of the property, sometimes 100%, depending on your credit score and the price of the property. You still need to be aware of the amount of money you need to contribute for a down payment to acquire a conventional loan. This can be anywhere from 20-50% of the property’s value. Every bank will be different and there may be some ability to negotiate. Loanbase helps you compare lenders