08/10/2021
Land acquisition can be loosely defined as the purchase of a land’s ownership rights. Getting the ownership rights to land is one of the first steps to take when building a real estate investment portfolio, as it is one of the most lucrative ways to make money in real estate. The importance of owning land is not limited to personal financial gain but also affects society – a point buttressed by Thomas Jefferson when he said “Landholders are the most precious part of the state”.
Here, we explain some of the benefits you enjoy as a landowner.
1. Land is in Constant Demand
Land is not a commodity that is available in unlimited supply. As the size of the world’s population grows, which in turn causes a spike in the demand for land, so will the value of land increase. The implication of this is that the longer you own land, the higher your expected returns, especially when you buy land in an area that is projected to experience significant growth in a few years as we are bound to see with the Lekki Corridor in Lagos, Nigeria.
2. No Production Cost
It is commonly known that there are four factors of production, one of which is land. The other factors of production all require the usage of either physical, financial or mental energy but not land. This quality of land also spreads to the fact that while land cannot be consumed, other things cannot be produced without land. Based on this premise, land can be considered as a resource that has no cost of production.
3. It Does not Depreciate
Land can be used for different purposes and not lose its usefulness, this has only contributed to its appreciative value. This form of real estate is typically classified as a fixed or long-term asset, and this is because its expected duration for usage goes beyond a year and should last a lifetime. Becoming a land owner is the most fitting way to invest your money, as you can be certain that the value of your asset will not depreciate and is one you can utilize for as long as you live.
4. Economic Multi-Utilization
As the owner of any piece of land, you are within the rights to use your property as you desire. Instead of leaving it fallow you can create structures and systems that can, in turn, create more revenue for you. The structures or systems can either be for agricultural production, recreational activities such as parks or housing, while still maintaining full ownership of your asset.
Owning a piece of land may sound like an expensive side project, but in reality, it can be one of the most cost-efficient and profitable investments you make. You have to do your research and think about what you want to do with the property in order to get the highest return on your investment.
It’s also important to consider that not all real estate investments are as profitable as they seem, but land ownership is one that will always have value and benefits for you and your family.
