Buying land is a wonderful way to invest in real estate, however, not all land is created equally. If you are considering adding land to your investment portfolio, you should learn about the different types of land investments available in Honolulu!
Before you purchase a piece of land, there are a few things you should first consider.
- What is your investment style? Do you want to buy and develop? Or maybe you want to buy and hold the property, selling when the land appreciates.
- What can you afford and how will you be paying for the lot?
- Do you understand all of the development costs? Property taxes?
Buying commercial land can be a great strategy for real estate investors in Honolulu. Take a look at up and coming areas and look for the deals before prices begin to rise. You can develop the lot, use it for parking, or flip it when it is in high-demand. If you are not buying the property in cash, make sure you are working with an experienced commercial lender to obtain a business loan. This loan will likely have a higher interest rate than a standard business loan.
Buying recreational land as an investment is a profitable and enjoyable asset for many investors. Recreational land is typically used for hunting, fishing, hiking, camping, off-roading and more. Your land will appreciate, while you get to enjoy it. The comparison is often made to stocks. Try to camp out on your stocks and see how enjoyable that is. Land is tangible. You can go there, you can see it. Many investors love these features combined with little to no maintenance.
Undeveloped land is a great buy. The potential for the land is limitless. Getting basic infrastructure set up might take some work but once it’s all done, you will have immediately added value to the property. If you are not planning to develop, you can always make money on the land in the meantime. The land could be leased out for parking or storage. You will not have any overhead, so you will be able to make money and sell when the time is right!
Infills and Single Lots
Infill properties are the lots not developed when a developer purchases a large tract of land. These lots are likely near a city or suburban area, and the utilities and typically ran well in advance. Finding these lots at a low price presents a great opportunity for you to flip. The demand for “finished” lots, ready to be built on, is high. For most people, buying land is the first step in building their dream home. You want to make it as easy for them as possible.
Some investors will buy large parcels of land and resell to developers or sub-divide the lots themselves, selling the lots individually for a profit. Depending on the size of your parcel, you might need to create roadways and bring in utilities to make developing feasible. Sub-dividing the land can be a lot of work, however, the profits can be high when done correctly. This is something typically done by more experienced investors.
Before purchasing any property, make sure what you want to do with it is feasible. Understand the purchase and development costs so you don’t find yourself in over your head. Double and triple check the zoning laws to make sure they are working in your favor. You will likely want to have a land survey done as well as a professional valuation for larger parcels.