Buying land for your residential use can be a good investment. There are many benefits to purchasing residential land, ranging from the potential capital gain of such a property to being able to build houses or other buildings on it. In order to buy land you need some knowledge in real estate investment and areas which offer good returns. This article discusses the advantages of buying residential land.
For any commercial business looking for an excellent return on investment, investing in residential property may be worth consideration. One can also decide to look for a tenant or lease the land in case he does not have enough money to buy the property personally. In such a case, the common lease term is 99 years.
Here are a few of the benefits of buying residential land:
Capital Gain
One of the main benefits of buying residential property is that it can gain in value over time. To understand this, we need to know about the concepts behind capital gains – which means the increase in price over time. If you bought a piece of land ten years ago and sold it after five years at twice the price, then your capital gain will be 40%. If you buy a piece of land today at twice the price, then your capital gain will be 60%.
In case of residential properties, the market is not very volatile, so you do not need to worry about having a lot of capital gains. If one has put time and money for buying a piece of residential land and he does not get enough return or even loses money due to interest rates, then he may consider selling the same piece of land and buy another one. Selling a property at a loss usually requires that one has used some other investment options. In case one uses options like derivatives or futures contracts then they get higher returns than investing in real estate.
Building Hazards
One of the main reasons why people do not buy land is its hazard or risk of getting into debt. The likelihood of losing money due to a problem arising in the property is very low if you have done some research. In case one buys residential land which is situated in the most prone area, that area may turn out to be commercial or industrial zone. This can reduce risk and lead to investment profits. If one puts time and money for buying residential property and he does not get enough return or loses money due to interest rates, then he can sell the piece of property and get a new piece for new investment.
Profits
Buying residential land and then selling it on at a higher price makes for a good investment. The property value is most definitely going to increase with time, so you could end up making a great profit later on if you hold onto the land for a few years and then sell it off. Of course, you need to buy the property at a lower price or else there won't be much of a profit left for you to enjoy when the deal is done.
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