Land Banking and Land Investments
Getting Your Land Investment off the Ground
For centuries, Land Investments have been the centre of most wealth investment. For the wealthy, it’s second nature to buy land for their living space, for their recreation, and most importantly, as an investment to increase their wealth. They have the resources to make these investments easily.
That’s the wealthy. For the rest of us, if we can buy land, we have to spend our money more wisely. We can’t just think that any plot of land will do. We have to hunt opportunities and ventures that can provide a decent return on our investment. To do this, and have fun with your properties, requires careful planning.
There are ten general categories of land investments. These include land for housing, land for retail and industry, agricultural cropland (one category for row crops and another for vegetables), grazing-land for livestock, timberland, mining land, vineyards, orchards, and recreational land. These offer their own unique challenges and opportunities for investment.
Buying Places to Live and Work
Of these categories of land investment, residential and commercial land developments are the easiest for most investors to get into. These are often the most common land investments that people make. Cities encourage these investments as a means to grow, and banks and real estate brokers are most familiar with these types of transactions. There is also an undeniable cachet of owning a building full of stores, or an industrial park, or a large multi-family residential community.
For those just getting into this type of investment, Real Estate Investment Trusts (REITs) offer an easy entryway. These trusts allow investors to buy into a broadly diversified portfolio, with different property types distributed over a wide geographic area. Rather than having to manage a single building or an industrial park, the REIT hires specialized property managers to handle the day-to-day activities of the properties in the portfolio. The income and profits are divided amongst the investors, and the diversity decreases the level of risk. Some REITs specialize in particular types of real-estate, while others focus on providing as diverse a portfolio as possible.
Issues of Land Investment
For some investors, the prospect of buying a plot of raw land for future investment or development is very alluring. There is so much potential to be had. However, there are many legal issues to consider when buying and holding parcels of property. Though you may own the land, the political jurisdictions they’re located within will probably impose a number of restrictions on how the land is to be used. Even without considering zoning bylaws and official plans, a property may come with an easement that guarantees access to a part of your property to some other party. Mineral rights may grant someone the right to extract and sell minerals from your property for their own gain.
As land ownership and investing in land has been around for centuries, centuries-old rights also come into play, including riparian and littoral rights. People who own lands next to rivers and other waterways have considerable rights, even if their land is far downstream from your own. If a landowner’s activities significantly alter the quality or quantity of a waterway, landowners downstream have a right to sue for damages. If your land happens to be in a flood plain, this greatly affects what you are allowed to develop.
Knowing Your Restrictions and Access
It is important for prospective land investment investors to understand the restrictions that exist around a plot of land they’re considering buying. Fortunately, many of these issues are known, and answers are available before any offer is made. Legal specifications are often found within the deed for the land, and these are typically available to the public via the Internet or by visiting a land records office in the appropriate jurisdiction.
A plot of land may be full of potential, but without access to basic utilities such as sewer, water, electricity, and telecommunications, most of that potential will go unrealized. Before investing in a property, investors should consider how remote a plot is, whether these utilities are available, and, if not, how much it will cost to connect to those utilities. This will also alter the plot’s property-tax obligations, as well as the possibilities for development, not to mention the landowner’s finances.
The Importance of Experience
The obligations and challenges of land investments may seem daunting to first-time investors, or even seasoned investors looking at a new type of investment. Fortunately, there are people who have experience in negotiating the legal obligations and the local regulations to unlock the true potential of your plot of land. If you are looking to invest in land for the first time, or if you are looking to invest in a real estate category you’re unfamiliar with, or a new municipal jurisdiction, it pays to reach out to professionals in the industry who understand the challenges and obligations and can turn those into tremendous returns on investment.
At SVN Canada, we have decades of experience in Land Investments including understanding property law and the opportunities and challenges of real estate development. We have conducted hundreds of feasibility studies to identify where investors should build, what they should build, and what they should do once they finish building what they build. SVN Canada knows how to connect potential investors with legal, tax, and financial experts who can negotiate the rules to your advantage, and ensure the best return for your new and exciting investment.