Investing in land comes with its pros and cons. If you’re considering buying land as an investment in Texas, let us explain the pros and cons of buying land in the vast and beautiful lone star state.
Whether you see buying land as an investment or you picture buying land in Texas as a dream place to build your own home with the long-term view to sell, it’s good practice to understand the pros and cons of buying land there.
Investing in land in Texas is an excellent way to boost and diversify your investment portfolio thanks to low costs, low maintenance, and low property taxes.
This blog post will take a closer look at the pros and cons of buying land in Texas and why it could be a great asset to any real estate portfolio.
Is Buying Land as an Investment a Good Idea?
Depending on the area, buying land as an investment can be a good idea.
Ideally, you should look for a state or county with low taxes and low maintenance costs but a high potential to become more desirable.
If you get this right, buying land as an investment can provide some financial security for the long term. There is, of course, the option to build on the land to create a steady income stream.
In Texas, land investment can be a great way to boost and diversify your investment portfolio. There is potential for development and the ability to make it income-producing. However, it’s important to consider the potential downsides, such as the lack of immediate income and the smaller buyer pool for residential land.
Adding land to your portfolio is a safe and practical choice for new and seasoned investors, and it is an excellent way to get into real estate investment.
However, if you’re interested in buying land in Texas as an investment, it’s sensible to speak to experienced land sellers.
At Elegment Land, we have a combined 20 years of experience investing in land in Texas, that we’re happy to share with you.
Investing in Texas Land Pros
We’ve already established that with the correct guidance, buying the right plot of land in Texas can be a lucrative investment with plenty of opportunities to build a home or rental property as a source of regular income.
Next, we’ll explore some of the investing in land pros for Texas in more detail.
Thanks to its great expanse and lack of income tax, Texas land is generally cheaper compared to other states, making it an excellent option for those looking to begin their land investment journey.
Having worked with many land investors in and around Texas, many people only need to save up for a few months to generate enough cash to buy a lot.
This opens the door to many people who want to begin investing but aren’t sure how to get started. If you find the right property, you can buy low, sell it off, or develop it and use the profits for an even larger investment.
When you buy land in Texas, there is typically little to no maintenance work involved. It can just sit there until the time is right for you to cash in.
You might have to deal with small things like keeping the lot free of brush and trash in a residential neighborhood, but you won’t need to deal with bad tenants, repairs, maintenance, or damage to your property.
This, of course, changes should you decide to use your Texas land investment to build rental properties. In this scenario, you’ll likely need to maintain your property regularly.
Lower Property Taxes
Property taxes are much lower for land in Texas than buildings.
Annual land tax can be just a few hundred dollars, while a home’s annual property tax can be a few thousand dollars, making buying land as an investment a more affordable option.
It’s worth noting that while there is no income tax in Texas, property taxes are considered high, so buying land as a long-term investment is an excellent way to get around this.
The key is to pick your land wisely in an area of Texas likely to increase over time due to higher demand.
Our article on how to determine land value in Texas is a great place to start, but if you still have questions about which is the right plot for you or how to buy land as an investment, simply give the team here at Elegment Land a call.
Potential for Development
If paying property tax isn’t an issue, you can develop the land yourself, adding a residential or commercial building depending on how the land is zoned.
In Texas, quite a lot of the rural land has no zoning regulations, meaning you can build a few cabins, yurts, or geo-domes and run an Airbnb.
You could also develop and operate an RV park for van life guests to camp overnight.
By building something where there was once nothing, you can generate tremendous profits by renting it out or selling it off as a profitable business.
Make It a Source of Income
While buying land in Texas typically does not bring in immediate income, many creative ways exist to make it work for you.
Once you’ve purchased your land in Texas, you can lease it to a neighbor so they have more room for their car or children’s play area.
If it is a large parcel and is allowed within that county or area, you can lease the land to a hunter or a rancher.
If you’re in a commercial area, you could even invest in land in Texas and then use the lot for parking during special events.
By using your creativity, buying land as an investment can be a great source of income.
Investing in Texas Land Cons
While Texas feels like the perfect place to buy land as an investment, it’s essential to evaluate both the pros and cons of buying land. Read through this next section carefully, and if you still have questions, feel free to give our friendly team a call.
No Immediate Income
Unless you’ve already got a clever business idea in mind for your land in Texas, land alone typically does not bring in income.
However, with the right strategy, it can be a great long-term investment.
If you plan to live on the land for a while, you’ll add instant value with the addition of a property. As we’ve mentioned, providing the land has the correct restrictions in place, you could also use it to rent out to RV drivers or as a campsite or as parking, while waiting for the land price to increase.
Buying land as an investment is often perfect for those who have the time and the patience to wait for the value of the land to increase, so consider carefully the pros and cons of buying land if you’re looking for something short-term.
A Smaller Buyer Pool
There is traditionally a smaller buyer pool for residential land in Texas than residential homes.
This is likely to be true of most areas since not everyone has the time and the knowledge to build a property, and many people prefer to buy one. However, this does present a brilliant opportunity for you to build and sell them on if you have the knowledge and the resources to do so!
Again, if time isn’t a factor, buying land as an investment is simply a waiting game. Provided you’ve bought the right lot at the right price, demand will eventually increase and the right buyer will come along.
If you’re looking for a short-term, regular income, creating a vacation property might be the way to go.
The rural acreage of Texas usually has no zoning regulations, meaning you could have all kinds of unwanted neighbors.
Luckily, subdivisions in Texas typically come with light covenants to prevent this.
A covenant is a contract that dictates how a property can be used, and most land lots will also come with some restrictions.
For example, you might find you’re unable to hunt on some lots of land. Others may not be suitable for an RV.
At Elegment Land, we have plenty of land available in Texas with varying degrees of restrictions. Even if you don’t find the perfect lot for you right away, our helpful team can send you regular updates on new Texas land investments.
Overall, buying land in Texas as an investment can be a safe and practical choice for new and seasoned investors. It is an excellent way to get into real estate investment, as the costs to get started are very low compared to other types of investments.
If you’re interested in Texas land investment, contact Elegment Land today to learn more!