Only investing in the right kind of land will produce income. Find out how to maximize your return on land.
Not All Land Is Income Producing Land
Making the best land investment in Arkansas is all about understanding the costs and income potential associated with a piece of property. For example, buying a commercial property can generate income through leasing, but it will also require maintenance and paying high property taxes. On the other hand, buying undeveloped land may be inexpensive and require virtually no maintenance, but turning a profit is very unlikely without expensive development. Luckily, there is a sweet spot between these two extremes that allows investors to start making a profit immediately without high development and maintenance costs. Let’s take a look at four of the best types of Arkansas real estate for producing income.
Your land investment can be classified as farmland if it has good soil, is near a water supply, and is easily tillable. Purchasing land with these attributes can be hugely profitable in very little time and with little to no effort. Large companies are always looking for good agricultural land to lease near their production facilities, and independent farmers who can’t afford land of their own will often lease long-term. Meaning that all you need to do is develop a contract that protects the profitability of the land and soil and you could be profiting for decades to come.
While not widely recognized as an agricultural powerhouse, Arkansas has thousands of acres of fertile, rich soil, near a steady water supply. This land is currently selling at about half the rate of Midwest farmland, which means the time to invest is now.
Investing in timberland is one of the smartest ways to diversify your portfolio while generating income. The value of timberland is on the rise, and returns are climbing into the double digits.
There are plenty of ways to achieve returns on your investment in timberland. The most obvious is to harvest your timber for sale, while subsurface leases are another way to keep the money flowing without having to do too much heavy lifting. Practicing proper harvesting and reforestation techniques can ensure that your timberland investment stays profitable indefinitely.
When buying land for investment purposes, people usually aren’t thinking about the finer benefits of owning a beautiful piece of land—namely, that you can enjoy it too! Green pastures, woodlands, riverfronts, and rolling hills make great places for family retreats and picnics. So, where does the profit part come in? Well, recreational land can be easily leased short-term during hunting seasons for more than the property tax rate. Because hunting seasons differ for various hunting weapons and game, there are plenty of opportunities to lease your land throughout the year. If you have a water source good for fishing, you can lease the fishing rights year-round.
Pastureland is always being sought out by farmers who need space for their livestock to graze, though it’s often not economically viable for them to purchase and maintain all the necessary land themselves. Investing in pastureland presents a rare opportunity to generate income from entirely undeveloped land. The best part is, as long as livestock are grazing, you shouldn’t have to do much maintenance at all—the livestock take care of managing growth and fertilizing the soil! To find out if your land can be leased as pastureland, you’ll need to assess the soil and water quality to know if you can keep up with forage production.
To find out more about leasing your land or making a smart real estate investment in Arkansas, you need to consult with an experienced land realtor. Davis DuBose Knight Forestry and Real Estate been at the forefront of Arkansas real estate for over 50 years. Contact us today to harness the full potential of your real estate investment.