Property has been a popular investment vehicle for a long time. In recent decades, yields have been rewarding, to say the least, whether from capital growth or rental income.
However, that’s not the only way you can make money from property. Have you considered purchasing land that can be developed for housing or commercial use?
Land is a valuable currency, and the possibilities of development are virtually endless.
Given our current national housing crisis and the political will to build more homes quickly, land is in particularly high demand for residential housing development. But don’t discard other, perhaps less obvious uses, such as office or retail space, parking or leisure facilities.
Before you get carried away with the idea and start looking for development land to buy, it’s a good idea to decide on a firm investment strategy and the goal you wish to achieve with the land that you eventually purchase.
Here are 6 well known strategies to consider.
1) Buy and sell
The simplest way to make a quick profit is to find land to buy below market value and sell it on as soon as you’ve found a buyer who is prepared to pay a higher price. No additional work is required on your part; you’re simply flipping the property.
2) Buy and hold
Another option is to buy land and hold on to it for the time being, in the hope that it will appreciate in value and can be sold to a developer at a profit at a later date. This is a popular investment strategy for property in up-and-coming areas.
3) Buy, get planning permission and sell
Land with planning permission is much more valuable to potential developers, so it pays to obtain consent, or work closely with an interested developer to achieve the best outcome for both parties.
4) Buy, develop and sell
If you are keen to have an input and keep control of the development process, you can buy the land and develop it yourself.
Whether you choose to build houses or set up a vineyard, obtaining the correct planning permission is key to a successful investment.
5) Buy, develop and rent
Alternatively, if you choose to develop the site yourself, you may decide that you get a better return on your investment by leasing or renting it out rather than selling it on. This can apply to housing as well as retail units or commercial space.
6) Buy, develop and hold
In this approach, you buy the land and develop it yourself with the goal of keeping the end product for your own use. You might want to set up your own land based or other commercial business or build your own dream home.
Using land agents
Investing in land for development is not something that should ever be entered into on a whim, or with insufficient understanding of how the market operates.
You wouldn’t buy or sell your home without expert assistance, and the same should apply to any property investment, particularly when there is the added ‘development dimension’ to be considered.
Using a land agent may in fact be advantageous to both buyer and seller.
- A land agent often operates across larger geographical areas and can act on behalf of a buyer or a vendor. With networking and relationship building a key skill, they will be an invaluable source of market information, whether you’re looking for development land to buy or to sell on.
- Selling your land for development and dealing with seasoned, professional developers is when you’re most likely to need guidance. An experienced developer may have access to his own team of planners, financiers and site managers to put together a preferred offer to put to you.
- Industry experience is critical for a land agent or consultant, therefore “the added value of a Land Consultant is being able to understand and dissect a variety of offers, provide objective opinions, and present the best (which is not always the highest) offer to the Landowner”, Land & Brand New Homes.
- While some developers are happy to deal with private landowners direct, many of the larger market players will prefer to deal with professional land agents – fellow industry experts who understand the technicalities of the planning process, the legal requirements, the pros and cons of the different purchase options available and the timescales concerned.
- On the face of it, any land deal should seem more attractive without having to pay agent’s fees. However, for both parties, this is often outweighed by the ease, speed and convenience of working with an experienced land consultant who literally knows the lie of the land.