The recent market difficulties has sent a shock wave through the minds of many real estate investors and caused them to doubt if they should buy land anymore. Buying land does not have to be frightening and if you keep these basic principles in mind, you should not have any problems.
The first rule to remember is that if you own real estate the “right way” then it is always a safe and good investment. Putting the bank at arms length allows you to save money over the long haul and will limit any amount of control they have. In times like these, being free of the bank is vital and offers the highest degree of freedom and stability. I realize this is not an option for most people, so maybe consider it as an ideal more than anything else. After achieving this monumental feat, realizing the freedom that comes from doing it, and avoiding the taxes that can prevent it can be a windfall.
Keeping your real estate that is free of debt as rental or income properties is a great way to compile a source of income that is always there when you need it. If you earn a six figure income and want to avoid paying the full amount of taxes on it, you can reduce your tax liability on your net sheet by buying real estate. Why not simply use your own income to purchase your investment property, as opposed to sending it in to Uncle Sam, and then be taxed on the income generated by the property, which will be dramatically lower. As always, get the input of your accountant before you try anything like this or you may end up costing yourself.
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. You can get some very good deals on the building lot market, especially when buying REO lots in bulk. They really are actually a good one right now, they simply will not yield much return for a while which makes the scenario in which you would invest an investment with a higher return more appealing.
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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