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Friday, January 29, 2010

Is A Building Lot A Sound Investment Presently?

By Gavin J. King

Buying land used to be the most likely and preferred purchase that real estate investors made, but in recent years many have started to doubt the safety of land purchases. There are a few guidelines for investing in land and they are easy to remember and apply.

Getting a loan may make things easier on your wallet but involving the bank only costs you more money in the long run. In other words, using your cash will help keep your bottom line stable and secure, without putting your assets on the line. In times like these, being free of the bank is vital and offers the highest degree of freedom and stability. I realize this is not an option for most people, so maybe consider it as an ideal more than anything else. Putting all of your savings toward real estate is a great way to offset any taxable income on your net sheet at the end of the year as well.

Besides the fact that when you buy a home outright, you can always rent it and you will have a nice littler income generated from it. To use your income to buy real estate is a great way to put off tax liability you may be facing and to build a collection of performing assets that may fund your early retirement. If you use the tax laws in the most advantageous manner possible, you can simply take your pre-tax income and spend it on real estate, which will offset your tax liability on your net sheet. I do recommend sitting down with your accountant to outline the exact plan to do this as your first step.

Using your money in a way to acquire building lots is a lot less expensive, but does not provide you with any immediate money so it has to be weighed in the light of income versus investment over a specified time frame. You can get some very good deals on the building lot market, especially when buying REO lots in bulk. As long as your investment strategy does not involve making a profit in the immediate future, buying building lots is a good idea, but otherwise stay away from them for the foreseeable future.

Using a note from the original land owner works better than using a mortgage due to the fact that you are dealing with a person, not a corporation. There are other options for getting rentals from the land you own, like doing joint ventures with a local builder, so keep your eyes open and make sure to cover your own assets in all of your business dealings. - 23212

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