Land investments are a great way to diversify your portfolio while not taking on very much risk. Purchasing ranch land has become fairly popular recently, especially with those looking to get both a financial and tangible return on their investment. While ranch land is an attractive investment vehicle, there are a few things you should know before making your first purchase:
In most areas, there are at least a few land use restrictions that govern what cannot be done with your land. For investment grade ranch land parcels, there are relatively few things that you cannot do on your land. Unlike land purchased in a city or town, you can generally build about any type and size of the house you wish on a piece of ranch land.
One of the best things about land investments is that it gives you something tangible you can use while the land appreciates in value. There is not much you can physically do with stocks, bonds, bullion, or mutual funds whereas you can live on your land, or use it as a vacation destination.
All types of land investments will include some sort of property taxes. Near or inside an urban area, this can range upwards of 1% of the land's value every year, and even more if you build any structures. Ranch land taxes are drastically lower than what you would find with most other types of land investments. You can expect to pay approximately about $15 an acre, in a state like Wyoming, in annual property taxes if you decide to leave your land in its natural state. Taxes for structures and improvements would be more, but still substantially lower than what you would find even in a mid-sized town.
Everyone wants their investments to appreciate in value, which makes investing in ranch land fairly popular with a younger crowd since land prices tend to increase over time. Residential, commercial, and agricultural land prices throughout the U.S. have all risen in the last 5 years, in some cases more than doubling in price. While there is no guarantee your land will increase in value, there certainly isn't any more land being made. A growing population means that more people are going to be looking to land as an investment in the future.