13.3 C
Wednesday, May 29, 2024

No products in the basket.

HomePropertyBuying Selling and Renting Property7 Business ideas to make money when buying land

7 Business ideas to make money when buying land

make money when buying land
Photo by Benjamin Davies on Unsplash

The current real estate market in Pakistan offers great opportunities to acquire land at low prices and in privileged locations.

Faced with the possibility of acquiring a lot, the first question an investor should ask himself is: what am I going to do with it?

Buying land just because it is cheap is not the best business option. Making use of your money to invest in the purchase of land will be an excellent idea as long as you are clear about what you are going to do with it.

Before buying you must develop a financial strategy. 

A piece of land can generate a very good return or it can represent an ongoing loss that destabilizes your finances. Everything will depend on the type of land and the financial strategy of its owner. 

For what reason? A lot is different in the hands of a builder than in those of a peasant, or in those of a lawyer who doesn’t have time to do anything with it.

For this reason, it is important to be clear that when acquiring land it is not only about investing capital. Time also plays an important role, in addition to the cost of the same, the costs of deeds and taxes that are paid must be added.

First of all, in order to develop a successful strategy, take into account the type of land. Since there are advantages and disadvantages between land in a commercial area and land in a residential area and these go according to the type of business you want to implement.

Consulting with commercial property consultants, like Whybrow consultants and surveyors, is crucial when considering land investments. These experts offer valuable insights into market trends, conduct feasibility studies, assess risks, aid in financial planning, and handle negotiations and due diligence. Their expertise ensures informed decisions, enhancing the 
potential for profitable outcomes in commercial land investments.

Options to Earn Money when Buying Land

These are the 7 strategies that we recommend to make money with land according to our experience:

1. Buy and Sell

It is the simplest option of all since it does not require knowledge in construction or of another type since it is limited to acquiring a lot at a low price and later selling it at a higher price. The yield is the difference between one quantity and another.

It is about going around the earth but in order to generate a higher yield it is necessary that the lot be bought below its market price. So you must be very attentive to buying opportunities. That is, time must be invested and a constant search must be carried out.

Taking into account the location and characteristics of the area will determine whether the business is a success.

Why is this important?

Analyzing the offer carefully will help you decide if it really is an opportunity. There is a risk that the price is low because the location is not good or it has been for sale for too long.

If you want to make this a way to earn money, make sure that the land does not have any detail that makes it difficult to sell later.

2. Buy, Hold and Sell

This strategy requires a little more patience than the previous one because it implies that after buying the land you have to wait a period of time for its price to rise and to be sold at a higher price.

Not only that, you must have the economic solvency to leave the capital deposited in the good itself.

The main disadvantage of this strategy is that some expenses will have to be made. To keep the land in good condition and up to date on its taxes, for example, the annual property payment.

If a growing area has been identified and you are not in a hurry to recover the investment, it is the ideal option. 

To make this a successful business, the investor must anticipate 10 or 20 years of the potential of the land he is buying since real estate is a long-term business.

It is also important to bear in mind that the profitability of a property is more relevant than its price or the capital gain it may achieve.

3. Buy, Grow and Maintain

This strategy is ideal for those who have experience in managing agricultural developments, either through cultivation for the subsequent sale of the product or the breeding of some species.

The disadvantage of this strategy is that only those who know the administration of agricultural land can implement it. Besides, a more or less large extension of land is required, which needs to be located outside the city.

Similarly, the profits obtained through agriculture can be reflected from 1 to 7 years depending on the type of crop.

Analyzing factors such as the fertility of the soil or whether it is subject to flooding will be a key element in making a successful purchase. This will lead you to generate income with land for this purpose.

An interesting option may be the cultivation of species such as succulents and ornamental plants, establishing a small nursery that can coexist with the urban landscape.

It is also feasible to grow a poinsettia or pine farm, although capital investment in crop development will be required before a return is obtained from the sale of the plants.

If it is land for livestock purposes, the topographical, physical and chemical aspects of the soil must be analyzed. For example, if the land is very inclined more than 30 or 40 degrees it can be said that it is not suitable for livestock due to erosion problems.

4. Buy, Develop and Maintain

If the intention of the purchase is to build on the land, the project to be developed can be leased later and generate immediate income. Such as the plots available for sale in Blue World City Islamabad.

Among the most attractive options for this strategy are:

Putting up your own business and offering a service, with a piece of land the possibilities are many, from a school giving private classes or you like to cook in a restaurant.

If you do not have a product or service to start your own business. You can build a shopping mall with several premises and lease them.

The shared lease of offices or warehouses under the co-working modality is an alternative for those looking for small, well-located spaces.

The vacation approach, for example, building condominiums or apartments in privileged areas for tourism and renting them to national and foreign visitors. There are even platforms for this type of service that facilitate the process.

5. Buy, Change Land Use and Sell

Some land can still be acquired in a rustic stage; that is when its type of use has not yet been defined and qualifications must be made to process a deed that specifies its use.

A later reclassification, for example, for residential use would make it more valuable to potential developers and more desirable. This is an additional step that they do not have to do themselves.

If you want to make a change in a forest area that implies a total or partial removal of vegetation for non-forest activities. It is necessary to request a change of land use from the concerned authorities.

Due to the consequences of the change in land use, this whole process can take several years, but it allows buying at a very low cost.

If you have the time and capital to invest, it can be a profitable business in the long run. To do this, you must carry out market research to ensure that the turn you want to give to the land is correct.

6. Buy, Upgrade and Rent

When we talk about improvements we refer to urbanization since when buying a lot it may be that it is not yet urbanized.

The first thing is to define the type of business that is going to be given to the land in order to later urbanize the land and adapt it. This is so that it can be leased to a franchise or entrepreneur interested in building on it.

As in the previous points, the location is important. If it is located in an area that is not suitable for commercial premises or franchises, it may take longer to rent and generate losses.

Another example of improvement is buying a piece of land and deciding to put a parking lot on it. Because there isn’t one nearby in the area. This way, the owner of a company or nearby housing area can lease it or acquire a pension contract for the cars of its employees or tenants.

In the case of franchises, it is very likely that they are the main interested parties in acquiring the land if at any time you decide to put it up for sale. In this way, you ensure a potential buyer and obtain constant income while the value of the land increases over the years. 

7. Buy, Develop and Sell 

This strategy refers to buying the land with the intention of developing it with a completely finished construction and later selling it to an end buyer.

For example, buying land for residential purposes to develop a private subdivision. The real estate sector has gained special relevance in the twin cities.

make money when buying land
Photo by David McBee from Pexels

Despite the real estate boom and the number of companies dedicated to real estate in this area, it is a profitable business.

If you acquire a smaller piece of land, a good graphic designer for advertising and a simple website with an online store. And virtual assistant will suffice for the sale of properties, especially in times of crisis where virtual purchases have become relevant.

As we mentioned earlier, buying, developing and maintaining, building warehouses, premises or offices to sell is also a good business.

This strategy of course has the disadvantage of requiring a large initial investment to carry out the construction.

Buying Land is a Safe Investment

Regardless of whether the land you acquire is for industrial purposes, residential use or in a commercial area, it will be a safe investment. This is as long as you take into account these key points that will help you earn extra money with your property:

Before buying a piece of land, it is necessary to consult its situation regarding land use so that it coincides with your investment project. For example, if your purpose is to build premises, the land use must be commercial.

For this, you must define in advance the type of strategy to be implemented. Additionally the development of a business plan that includes factors such as:

  • Financial indicators
  • Sales expectations
  • Risks
  • Control mechanisms
  • Tax scheme
  • Market study

In addition, it verifies that it has a property title that allows the transfer of rights through a sales contract or other valid contract and the payment of corresponding taxes.

In each state, there are variations of the legal framework for the purchase and sale of land. Being uninformed in this aspect is a serious mistake. So we advise you to contact experts on real estate issues such as Sky Marketing who will know how to advise you and find the best option for you.

Recent Articles