I love real estate, and all this week on my blog I am enumerating some of the many the reasons why I think that real estate is the cat’s meow. Today, I’ll tell you one of the reasons that attracted me to investing in raw land in the first place – the low holding costs.
One of the most worrisome prospects of purchasing an asset you want to flip is how much it will cost to maintain. For example, if you are flipping a house the traditional way, while looking for a buyer you will be responsible for taxes, insurance, and basic upkeep to keep the structure presentable and safe.
But land is much simpler and has super low holding costs, because in most cases the only holding costs are the property taxes, which are extremely low when the land has not been improved on.
As is the case with most investments, it’s not about hitting a few home runs; it’s about getting a lot of little base hits. My real estate investment company buys up as many pieces as we can and then we list them on our website and send out emails to our client list. Some of our parcels might sell within a matter of days and others might take a few months or even a few years to sell – it depends. But I’m not worried about holding on to the land for a few months or years because I know that the holding costs are going to be so darn low!
Isn’t real estate awesome?
But it gets even better – even if I sell with financing to a client, because I am still officially the owner of record I will responsible for keeping the taxes up to date. But in a financing deal, I make sure to prorate the taxes to the buyer, essentially eliminating 100% of the holding costs. The buyer accepts this as part of the financing deal and turns the land into pure profit for me.
There are so many reasons to love real estate (and vacant land in particular) and I hope that you are starting to get as excited as I am about it.