Real estate investment is an opportunity to ensure your money and also protect it from inflation.
As you may know, by acquiring a property you get a tangible asset which worth will be increasing over time thanks to surplus value of the area where it is located. Hospitals, entertainment centers, shopping malls and top schools are some of the places that can influence in home property and rental fees.
That is why many investors see investment as an opportunity to generate extra income and recurring revenues. However, buying a house or apartment is not the only way to invest in real estate.
This time we will tell you about investment lands, their characteristics and why you should consider land investing to secure you future and grow your money.
An investment land is a piece of land in a privileged location that offers its owner the possibility of make a return on investment thanks to surplus value of its location.
In many instances, investment lands or investment lots may not have urbanization or services but there is possibility of growth. An investment land is perfect for first-time investors. At the same time, investment lots are excellent for people interested in long-term investments, since as time goes by, capital gain will be increasing.
As mentioned in ‘What is the investment that generates greater capital gain?’, location is the key factor in real estate investment because it will determine whether your long-term investment is worthwhile or not. So, before buying a property, the first thing you should consider is the area where it is located.
Sometimes, an area with high capital gain is very easy to identify: there are shopping malls, schools, hospitals, it is easy to access to different areas of the city, and so on. This is due the fact those areas have experienced visible growth; there are shops or are being built. However, growth is not always visible in investment lands.
That is why it is important to know the similarities and differences of investment land, residential lot and industrial lot.
As we mentioned before, an investment lot or investment land is a piece of land with a privileged location. For many people it may not make sense to invest in lands without urbanization -these lands may not have electricity or water services-, however this type of real estate investment is a great choice for those who do not want to invest much money and secure it.
Not all investment lands are the same. We emphasize the importance of location and future growth plans: Some investors do not intend to build on their investment lands, and they want to resell them after they increase their capital gain, so it is very important to conduce a market analysis and analyze development plans.
That is why the term virgin land is often used to refer to investment land.
For example, the Riviera Maya is currently one of the areas with the greatest influx of tourists in Mexico and it is also a top destination for European, Canadian and American travelers. Thanks to the excellent location in Yucatan Peninsula, investment is growing in the Riviera Maya.
When talking about the Riviera Maya -and cities such as Tulum and Playa del Carmen- it’s easy to think of it as a paradise for real estate investment and an excellent option for making money. But it was way different 15 or 20 years ago.
The fact that property value will increase overtime is what makes acquisition of investment land very attractive. Imagine if you had bought an investment land in the Riviera Maya, Tulum or Playa del Carmen 15 or 20 years ago, with the current demand, value of your land would be higher than when you acquired it.
Unlike investment land, a residential lot is a space that is located in private area with growth plan. These lots have public services such as electricity and water, and even paved streets.
In general, residential lots are acquired for building residences, but it does not apply in every case. For example, there are those who buy residential lots and then resell thanks to capital gain of the area where the lot is located. Although, some people buy a residential lot to build a house according to their needs.
For example, people that do not wish to build a two-story house but want to build a house with more mobility, or maybe people interested in customized spaces -such as larger bathroom, studio or hobby room- that they could not have in an already built house. Each investor has different reasons to invest in a residential lot, but of course they want to do it in an area that offers them more than a good location.
For example, residential lots with amenities give residents the assurance of investing in an area that, in addition of high capital gain, also have features that improve quality of life: green and large areas, soccer fields, event hall, gym and private security are some of the amenities that residents can enjoy when acquiring a residential lot.
So far, we know that investment lands are spaces in virgin areas without urbanization, while residential lots are located in private areas with amenities and future construction project. Industrial lots serve other function. As the name implies, this type of lot is ideal for developing projects related to the production or protection of both assets and raw materials.
Industrial lots are perfect for people who are thinking of taking their company to the next level: since these lots are ideal for warehouses, distribution centers, and why not? You can even establish company offices. Everything depends on your model of business and needs.
For example, some business to business companies -also known as B2B- decide to invest in industrial lots because that is an opportunity to reduce production costs and at the same time allows them to obtain a property that increases in value over time.
Now that you know the difference between investment land, residential lot and industrial lot, let's talk about the benefits of investing in them.
Investing in lots has many benefits, and although the purchase intention is different, it is important to know the advantages.
One of the advantages that most attracts real estate investors is the low cost of a lot in a privileged location, especially compared to the cost of a house.
It is very important to emphasize that, in order to make a successful investment, you need to think of long-term growth and the location of your lot. It will not help you to buy land at a very low price if the area where you are doing it does not have a development or surplus plan, in the long run you can lose out.
It is preferable that you acquire a lot in an area with surplus value, that is to say that it is increasing. In many cases these lots are located within private ones that are in the construction process in areas that are close to commercial plazas, hospitals or schools.
Remember that to make a good investment you need to analyze the area and pay attention to goodwill and growth possibilities. Elements such as amenities are a plus that can help you in your investment, for example, the private security where your property is located.
As mentioned in ‘5 reasons to buy a pre-sale home’, you can buy a pre-sale residence at a low price, but property value will increase over time.
The same applies to pre-sale lots: when you buy one, you have the possibility of reducing investment costs and get better benefits, such as access to financing. This is why more and more millennials are encouraged to acquire lots as their first investment, since it is a way to securing their money with a low-risk investment that will eventually increase its value when the area is fully developed.
If you are starting your real estate investment portfolio, you may feel more comfortable buying a lot than a house. Lots are low risk investments that increase value over time. However, it is very important that you do some research before making an investment: learn more about real estate agencies or construction companies.
When acquiring a residential lot, investment lot or industrial lot, you will need a property deed. You can read ‘What documents should you request when buying a property?’ to know the documents required for buying a lot.
If you are thinking of buying a property FSBO -for sale by owner- it is very important that you check the authenticity and veracity of the documents with the help of a notary. Acquiring a lot with an experienced real estate developer is the best way to secure to your money. Remember that you should choose carefully property location and future plans in the area where its located.
Investing in lots it is easier than ever, especially in cities like Merida where investment is allowing the arrival of shops, businesses and services that are positioning Merida one of the most important cities in Mexico.
As you may know, investing in lots or land gives is an opportunity you should not miss, whether you plan to resell or build on it in the future, a lot can generate better returns than saving money in the bank. In addition, if you benefit from pre-sale prices, you can own land in areas with guaranteed capital gain that will increase its value over time.