Land is one of the best investments you can make. It is versatile, and a limited commodity. If you are considering investing in land, then now is the time to do it.
When is the best time to invest in land?
The short answer is, it’s always a good time to invest in land. There is a limited quantity of land, so it generally holds value very well. Moreover, the value of land is currently increasing all across Arkansas.
Before you invest, it is important to understand the value of the land you are considering investing in, it potential uses and the current market demand. Obtaining a quality real estate agent can help you make a sound investment that will truly pay off.
Buying land for investment purposes
Buying land in Arkansas is an excellent long-term investment opportunity. Land assets can often provide advantageous returns. This is why some of the world’s biggest investors and investment firms choose to invest in land.
However, success is not guaranteed. It is important to consider which type of land to invest in, how to finance your purchase, and make a solid plan about what to do with your land once you obtain it.
How to choose an investment
Choosing which type of land to invest in is key to a successful investment. Arkansas has many viable options including timberland, farmland, recreational land, and pasture land. Depending on what type of land you choose, you can obtain profits from agricultural leases, livestock, hunting leases, timber, and in some cases mineral rights, and even water rights.
Timberland is a popular and successful investment Arkansas is known for its wealth of forestland in high-quality timber including pine and hardwood species. Investing in timber can generate profits not only from the timber itself but also from other sources.
If you want timberland for the intention of logging it, then there are several factors to consider. For example, consider the land’s available infrastructure and the current local, regional, and national market for timber. Before purchasing timberland, it is important to get a timberland appraisal.
Farmland investments can offer you recurring returns if you choose to lease the land to local farmers. This long-term investment is best done by purchasing existing farmland rather than converting forest land into something agriculturally suitable (a timely and costly process).
Investing in recreational land can provide opportunities for returns in hunting leases. For many owners, the wildlife and the joy of owning a piece of nature is one of the best returns. It often becomes a special place for vacations and spending time with family or friends.
Pastureland has proven itself as a viable investment. There are important factors to consider before making this type of investment including soil types, non-grazeable land, past land management, water location and quality, and infrastructure. The land needs to be suitable in all these categories in order for it to be attractive to livestock herders.
Getting a land appraisal
Getting an appraisal on your potential investment is a recommended step before making a land purchase. Here is a quick overview of what one of these appraisals looks like.
A land appraisal gives you an overview of the current and potential value of the property. Not only do you need an appraisal to make sure it is a sound investment, but you may also be required to get one for insurance, tax, financing, or litigation purposes. That being said, the valuation of an appraisal can vary depending on its purpose. For example, a valuation done for the purpose of insurance may be different than one done for viability as timberland.
Appraisers can also choose different methods to arrive at a valuation. There are three main methods: the sales comparison approach, the cost approach, and the income capitalization approach. In general, real estate appraisals will use a combination of all three approaches. Market conditions and the characteristics of the property, as well as its purposes, will weigh heavily on the final valuation.
For more information
Davis DuBose Knight has a dedicated team of real estate specialists and appraisers that can help answer any questions about purchasing and financing land or land and timber appraisals.
It is the right time to invest in property, so do not miss your chance. For more information, contact Davis DuBose Knight Forestry & Real Estate today at (501) 219-8600 to get started.