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Purchasing Vacant Land – The Pros and Cons

To many, the idea of buying a vacant land can easily be overlooked, because it does not seem as exciting as purchasing a new home. It might even seem pointless at first glance to just settle with purchasing land by itself. But the truth is, there are several advantages to buying your own piece of vacant land. Whether you are struggling to enter the market, keen to invest or would like to build a home unique to your style and needs, vacant land can be an attractive and low maintenance investment option.

Potentially Less Expensive

Buying undeveloped land can often be cheaper than buying an established property in the same location. Property these days is at an all-time high, especially in major cities throughout Australia. A lot of people can find it difficult to enter a sellers’ market such as this, so vacant land can potentially offer a more affordable way in. Land is a low maintenance investment, so you could consider purchasing a vacant plot with the idea to build when your budget allows.

It is Low Maintenance

Vacant plots of land are what many call a ‘hands off’ or ‘passive’ investment. This means that when you purchase vacant land for investment, your biggest concern for maintenance will be having someone mow the lawn occasionally, to keep it looking respectable. You also will not need to worry about hiring a property manager to manage it and you can relax about repair work. With no property on the land, you will not be needing to hire the help of a plumber or repairman, leaving you with not a lot to worry about.

You Can Do What You Like With It (Within Reason)

One of the biggest reasons Australians like to buy their own vacant plot of land is the flexibility they receive to customise their own home to suit their lifestyle. When you buy a vacant plot, that land is all yours to do what you like. Provided you stay within council restrictions and the building codes of the area, you have full choice to leave it the way it is, sell it to a developer, or build your dream home with just the right sized yard and living space to suit your needs. You could even turn it into a commercial property and receive investment returns through renting or selling. A vacant block is a blank canvas and that is considerably one of its most attractive features.

Vacant Land Potentially Offers Long Term Appreciation

You may take a tactical approach to purchasing land. You may select a location that may not be desirable to homebuyers at the time with the possibility that things change over the course of time and as infrastructure develops such as transport lines, commercial areas and new homes are built, your investment will be passively accruing value along with these changes. Vacant land purchases usually stay in about the same condition from when you purchased it, where houses and properties tend to lose value if they do not have improvements and maintenance on a regular basis.

Vacant Land Is A Fairly Simple Purchase

Buying a vacant plot of land is significantly less effort than buying a home or other property. For a start, while you should do your research and obtain the right advice and information necessary, you do not actually need to see the land to purchase it. This is great news if you live in another state and do not have the time or means to travel.

The Negatives of Vacant Land

While there are many attractive advantages of purchasing vacant land, this type of investing does have a few disadvantages that are worth mentioning. First of all, when buying land, research and advice is key, as you will want to ensure you have bought land in a good location for growth on your investment. Without advice and the right information, there is a possibility you could buy land out in ‘the sticks’ that has no growth, leaving you stuck with a bad investment. You should also consider that if you are borrowing to invest, your vacant land will not earn an income for you like a rental property would. The appreciation and return on investment come later over time and you will only see it when you cash into a buyer who will hopefully be purchasing it for more than you originally bought it for.

Buying vacant land presents a great opportunity for investors, but you need to be aware of the associated risks, do your research and speak to a professional for the right advice. For more information get in contact with Watson Wealth on 02 4038 1623.

Disclaimer: Your full financial needs and requirements need to be assessed prior to any offer or acceptance of a loan product. Licensing Statement: Credit Representative 525053 is authorised under Australian Credit License 389328

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