The Market Value of Land in Real Estate: How Important Is It?
When thinking about investing in real estate, bricks-and-mortars come to mind, but the most basic real estate investment strategy has always been land investment. Land as a real estate investment strategy is something you should consider if you have the resources and shrewdness to make it generate money.
One common question that always comes to the mind of many real estate investor is: How much of an effect does the market value of land have in terms of real estate investments? The answer is simple: To classify the market value of land, it is very important to understand its importance. Land is the most important factor in terms of the success of your real estate investment. Purchasing a real estate property such as a piece of land holds great value to any investor. The appreciation of land is a certainty because of city expansions, overpopulation, and the healthy real estate market.
Market Value of Land in Real Estate: Its Importance
Consistent Appreciation
Real estate investment is secured and valuable. Its owners can hold it for years to achieve the level of profit they expect. The market value of land in urban areas is ever rising and this is because urban areas are expanding due to migration of people to these locations in search of jobs and economic opportunities. This migration creates a chain of supply and demand for new lands and ultimately residential properties for people to live in.
We have all read some stories or articles about landowners in Nigeria or Lagos State who bought a piece of land decades ago for incredibly low values only to be rewarded with insanely high returns years after. This is the full power of the market value of land. It is always on the rise in urban areas.
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Future Planning
Before investing and determining if the market value of land will increase, an investor should research on the demand of real estate in the area to find out if it is increasing at a certain level or if it has a very slow progression rate. Investing in land in developing areas needs some understanding of the economic situation of the particular location, its growth, and the growing population there. Investors who are not able to purchase land in major cities due to the high prices usually search for developing or booming cities with a lower market value of land for the purpose of a long-term investment.
Variety of Options
Land is the base of all real estate properties: residential, commercial, or industrial. The market value of land increases because it is an entirely flexible asset. Owning a piece of land in a desirable location gives the investor leverage and options on what to do with the land. A real estate investor or a real estate developer can buy a piece of land and build an apartment building where it stands to make a lot of profit from the sale or rent of apartments.
Conclusion
Land is the most valuable form of asset investment in the real estate market and owning one gives you leverage when it comes to the market value of the land. The market value of land and its importance in real estate investing is closely related to the economic situation of the area of investment. As an investor, it is your job to understand the growth pattern and the appreciation rates of the land over a while. The market value of land is the main pillar which profit in real estate investing depends on.
