Land Speculation, Does it Make a Good Real Estate Investment?
Purchasing vacant land that has the lowest basic value and turning it into a pyramid of values that includes everything from commercial sites to parks is what land speculation real estate investment is all about.
The key to land speculation for real estate investing, therefore, is due diligence. Real estate investors must determine the pattern of growth in the community and tie that together with the future infrastructure planned by the community.
Advantages of Land Speculation
When circumstances are favorable, there can be little risk to this type of real estate investment if the real estate investors have the time and carrying ability. If the land can be banked for several (perhaps numerous) years, land speculation can be a profitable real estate investing opportunity.
Disadvantages of Land Speculation
The primary disadvantage of land speculation is that local governments commonly change plans for future development, or cancel future projects altogether. Moreover, long-term real estate investing in land can be difficult and expensive. Taxes can increase substantially; building restrictions or moratoriums can limit or prohibit reasonable development; utilities brought to the site may be charged against the property owner; and so on.
Land speculation, of course, is just one of several types of real estate investing opportunities available to real estate investors.
