Ever since the start of the current financial crisis many so called experts and news stations have been making it seem that the real estate market, including land, has all but been destroyed. The truth, however, is that land investment is not responsible for the current recession. It is because of the recession that land remains one of, if not the best, option for investment. The following are some of the reasons why land investment is ideal in a time of recession.
Because there is not much land available, the risk involved in its purchase as an investment is low. People will always want land for a multitude of reasons and thus ensures that there is always a demand.
Prices Fall During A Recession
When a recession occurs, the prices for goods and services tend to head downwards. This is due to the fact that people are not earning as much as they used to. Also, many people have either lost their jobs or have there working hours reduced. The price of land will also tend downwards making ideal for investment. Thus you will be able to acquire land at a basement price. In some places across the country land prices have fallen by as much as 95% due mainly to the current recession.
After The Recession Prices Will Go Up
If you purchase land during a recession, then chances are you would have gotten it at an almost rock bottom price or close to it. When the recession has ended the price of land will begin to tend upwards. At this point, your returns on your investment will be great.
Good For Inflation
This recession has brought about an increase in the rate of inflation that has also become prolonged. Land as an investment operates somewhat outside of the rate of inflation, in that it will always be a valuable asset to have simply because its value to us tends to remain stable or even appreciate over time. At no time will it be viewed as worthless, psychologically.
Cheaper to Develop
During a recession it will become cheaper to develop your land if you desire to do so. This is to due to reduced construction costs, especially if you chose to put up commercial or residential buildings that you intend to rent out on it. If the land is farmland, then you may want to grow a certain crop on it and with the prices of most products and service falling during the recession your cost of production will be far less. Thus the benefits will increase once the development is done and the recession is over.
The key to land investment during a recession is to ensure that what you invest in is not a worthless piece of land that no one would want and that will not benefit you in any way. Not all land is created equal when doing investment. Land in prime real estate areas, agricultural lands, timber land, and pre-development land are some of the better opportunities you should be aiming for.