Why Invest in Real Estate?

With so many options available you may be asking yourself, "Why invest in real estate?"

Real estate investment is about security. The stock market can move with lightning speed: rising 100 points in a day, then falling another 200 overnight. However, Land prices tend to climb steadily over longer periods of time. When you invest in land, you are investing in something real: a solid piece of American soil that you can see, touch and experience for yourself.

One thing that investment professionals can agree on is the necessity of having a varied and diverse portfolio. Land investment can help to achieve that diversity. Jeff Opdyke of the Wall Street Journal stated: "Investment pros routinely agree that a portfolio should have between 5% and 20% invested in real estate that isn't a primary residence."

Investing in the stock market can make for a quick profit … or a quick loss. Land is a better investment for the long term. As a rule, the price of real estate tends to double every 10 years. Historically, it has proven accurate to say that a property worth $10,000 today will be worth $20,000 in 10 years.

One of the reasons that real estate prices tend to rise so consistently is the effect of inflation. Although inflation can harm many forms of investment, it is a boon to land investment. "A physical asset such as land goes up in value when inflation soars," said Jim Jubak from MSN Money. Jeff Opdyke agreed, "From a financial-planning perspective, real estate is an asset that investors should have in their portfolios over the long term. That is because real estate serves as a counterweight to inflation."

The simplicity is another factor that draws people to invest in land instead of other forms of real estate. For many Americans, the home they live in is their first major investment. They put their money down, then they put on a new roof, add some landscaping to increase the curb appeal, watch for home prices to rise, and then, when it is time to move out, they repaint all of the rooms, clean everything and hope for a big return on their investment. Those who invest in commercial or multi-unit residential property worry about repairs, inspections and tenants who do not pay.

Buying land has many similarities to investing in other types of real estate, but it is much easier. There is no roof to repair or renters to worry about. Land is an investment that grows without your having to lift a finger. Values grow as the cities expand, new roads are built and new businesses are developed. The population of America is booming and is spreading out very quickly.

Land investment also carries the freedom of having invested in something you can actually use while it is growing in value. Do you enjoy the outdoors and dream of gazing up at millions of stars in the peace and tranquility of nature? Many parcels of land are available for camping or hunting. Or you could choose to develop your property. Most parcels have a variety of uses to explore.

The key to successful land investment is doing your research. Think about what you want the land you buy to accomplish. How much of a profit would you like to make? How long are you willing to wait for this profit to materialize? Do you want to develop your land, use it for recreation or simply hold onto it as the value rises? The answers to these questions go a long way toward determining what type of property is right for you. Different pieces of land are ideal for different types of buyers. Educating yourself is the best way to succeed.

Invest in land for the security it represents, for the freedom of owning your own piece of America, and perhaps the best reason of all, for the profits you can make. As Andrew Carnegie said, "Ninety percent of all millionaires became so through owning real estate."