a couple talking to a real estate agentFlipping is a lucrative but also quite risky way to earn from the property market. Though it may appear easy, investors who are risk-averse may find it difficult to get into. If you have a low appetite for risk but want to invest in the property market, there’s another way.

Land Banking

An often overlooked technique, land banking is the practice of buying raw land—this refers to land that is vacant and has no improvements. It is slow, which adds to the lack of interest in the practice, but can be significantly safer than buying an apartment building, commercial space, or house. Owning an empty piece of land doesn’t cost you much. Beyond property taxes, even mortgage if you chose that route, you don’t have to pay for utility or maintenance costs. You can buy a piece of land and leave it alone. The forces of inflation alone will allow the land to appreciate in value.

Choose Wisely

Of course, it’s also not about buying just any piece of land. You need to know where you’re buying. When you purchase raw land, do it with an eye towards future development. Although most properties will appreciate in value over time, land that is in the path of development will appreciate in value faster and better than one that is not.

It Has Its Own Risks

Investing in raw land is not without risk. Consider whether the amount you used to purchase the property is from disposable income. If it is money you cannot afford to lose, you may want to wait awhile to invest as it can be difficult to recover the amount if you suddenly need it back.

READ  Types of Services Offered by Freight Forwarding Companies

Finally, make sure you are putting your funds with a developer that has a solid track record. There may be plenty of land for sale in West Melbourne but if your developer is new or hasn’t had much experience yet, there’s a chance the development plans may get derailed and delayed indefinitely. Again, be sure to exercise due diligence to reduce the chances of your investment going to waste.