What to consider when you want to start investing in land?
Is real estate just houses, flats and commercial premises? Of course not. There is one more branch of real estate – land.
Today, we will briefly discuss the characteristics of investing in land, considering the situation when you want to diversify your investment portfolio.
IT’S ALL ABOUT LAND
When we consider the investment potential of land, we understand that it entails two forms of earning money.
The first one is to sell at a profit. But there is a catch. According to Polish law, if you buy land you can sell it without incurring income tax costs after 5 calendar years from the purchase. An exception to this rule is when you inherit land. Otherwise, if for example you buy land in December 2020, you can sell it in January 2026 at the earliest.
As a matter of fact, buying land at the end of the year in some cases can be beneficial, since:
- You can include such a purchase in your business costs,
- The investment will also allow you to deduct VAT,
- Making an investment before January the next year can help you avoid property price corrections (which most often occur after the start of a new year).
If this situation were to be considered, if you choose land wisely, you may find that its location is a desired spot for developers. And it is not just about residential development, but also commercial and service development. We see that cities are expanding their boundaries, within which new economic zones, industrial or business parks are being built. In addition, large areas are needed for the construction of new food chain shops (such as Auchan, Biedronka, Lidl, etc.).
Therefore, if you find good building land, investing in it will be like hitting the bull’s eye.
Also, unlike other forms of investing money, land is not as susceptible to economic turbulence as (crypto)currencies or stocks. And it is definitely safer in terms of vulnerability to the effects of inflation, so your capital invested in this way will not lose value. On the other hand, however, the period of return on such an investment is definitely longer.
The second form of income is rental. Just like flats, land can be rented out. If you make sure that the land you are interested in meets all the criteria (yes, criteria; there are a lot of legal aspects involved in acquiring the right land: whether it has all the utilities and a local area development plan), you may find that renting is the best option.
The year 2020 has shown that e-commerce is an industry that generates massive profits. In the process of fulfilling orders, almost every company needs space to store its goods. And this creates the need to expand existing warehouses and build new ones – either own warehouses or those operating as fulfilment warehouses. Therefore, if your plot of land is located near major roads – national roads or motorways – it can be a really attractive location for a warehouse.
Renting a plot of land for a warehouse, or (better still) building your own warehouse to make it available to others, can generate very stable and long-term profits, as commercial contracts for such ventures are usually concluded for long periods.
Since it turns out that not only the purchase of premises is financially beneficial, but also the purchase of land, there is one question to be asked:
HOW DO I GO ABOUT IT?
The pattern is similar to that of any other property.
You must take all factors into account
And there are numerous factors. As we mentioned earlier, for example:
- Is there a local area development plan?
- Is there a current extract from the land register? (Ideally, it should be issued no more than 3 months earlier)
- Is there a zoning approval?
- Is access to the land provided?
- Have building permits been issued/when will they be?
And many more…
One last piece of useful information: It turns out that you can also buy agricultural land, the status of which can be changed (that is, converted so that it is suitable for building purposes). This is possible. And the area of such land can be up to 1 hectare! This is obviously not the easiest process and it also costs a lot, but it may turn out that even after adding this expense, the plot will be more profitable than land in an urban area. Of course to work out all the details you need sound advice, right?
Fortunately, you are not left alone. A professional real estate agency will guide you step by step through the buying process, and will even do some of the work for you.
After all, the point is not to make any mistakes that could potentially cost you a lot in the future.
Also, you may find that the land you are looking for is currently in our offer.
So do not hesitate and simply check our offer.