Is Land A Good Investment?

This is a simple question that has a lengthy answer. The short answer is that land is only worth what you can do with it. Therefore, finding out what the local zoning laws are is the first thing you want to do when looking at acreage to buy for investment.
For example, you may be considering buying a parcel of land for a subdivision. While land subdivision is probably the easiest way to begin in real estate development, you still need to do your market research. Keep in mind that each potential buyer for a piece of this cake you’re making needs to feel they are getting a good value.
This is where knowing what the zoning regulations are before buying any acreage is a must. You should know the size of housing blocks that are popular and what is selling in the market sector you’re considering.
Some zones will allow you to build houses and other zones allow condos. Then there are the ones that are for commercial use such as shopping strips or offices. Or the land you are looking at may be zoned industrial. Do you homework before you buy and know what you can do with it.
However, the current land use may be changing in the area that you are looking at purchasing. Perhaps it's on the city border and is zoned farming or rural. Or, due to demand of the population growing, a residential development could be moving in the direction of this land. If that were the case, you can apply to the zoning authority and request a rezoning of the land. Remember though, that to change from land that is deemed farm use to residential use will take time and money.
So before you buy acreage for an investment, your first job will have many different steps to it. The first step is to find out what the zoning restrictions are for the land you’re considering buying. The next step you should take is to find out the opposition's plan is in this area. You want to come up with plans that will make your design more unique.
If subdivision development is the way you want to invest, it can be a profitable investment to undertake. There is a right way to do this and have a pleasurable experience while making money too, if it is carried out with a system behind it.

Real Estate Investing With Your 401k Money

You may already have a 401k account in place. Since those funds have taken a drop over the past couple of years, you are now looking for other ways to build up your retirement nest egg. Have you considered using part of your 401k to increase your retirement nest outside of your 401k account? Probably not, most people don’t know that there are ways to use their 401k’s for other investments outside what is offered there.

Many investors have started their real estate investing by buying raw and vacant land with their 401k funds and making a tidy profit too. This is not only creative thinking, but it is safer than using your own money. However there can be risk too if you don’t watch how you go about it. This needs to be a personal decision based on your own preferences.

One way to use your 401k for real estate investing is by taking out a loan against your 401k. You probably have always thought of your 401k to be where money went out of every paycheck and built up into a lump sum that sits there, drawing some interest, till you retire. Other than seeing that contribution deducted each pay check, you may not even think about your 401k until income tax season. Good news! Your 401k and raw land investments can create a meaningful relationship that will earn you more money!

Seasoned investors will tell you that the main goal with real estate investing is to use little to no money of your own. This is even more so when buying vacant land. When you borrow against your 401k to finance your land investment, you won’t be using monies that you depend on to pay your bills and survive. You want use this money to purchase good deals on land and then when the economy turns around, you sell it and receive all your original money and more. This allows you to payback the loan without affecting your 401k. You won’t be taking the money out of your pocket and you’re paying yourself back with interest.

As with any investing, there are some cautions you need to be aware of though. Such as there is probably a maximum amount you can borrow against your 401k. That amount can vary based on how much you have in your 401k. Also, there are no tax benefits when you finance a portion of any real estate transaction with your 401k. Nor will that real estate purchase be eligible for mortgage-interest tax deduction either.

If you aren’t a risk taker, there is a more safe and secure way to invest in land and still use your 401k. There are 401k plans out there that offer the option to invest in real estate trust. The part that makes this safer for you is that the trust companies do the actual real estate investing. This is less work and worry for you, but you also have less control on what real estate they invest your money. You found a good deal on a piece of land, but you have no control of your money purchasing it.

If your 401k doesn’t offer a real estate trust, another option is move the money from your 401k in to an IRA if that is allowed. You will be penalized for taking your money from the 401k, but it will give you more flexibility with your money. And with the right land purchase, you will make more than enough profit that the penalty is a small cost to pay. Even with this method, remember that you are only borrowing the money for a short time and make sure you repay yourself as soon as a deal is closed. Keep the profit available to purchase your next land investment.