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Big Land vs. Big Houses: Where to Invest Your Money

As the housing market rebounds in the United States, many people are considering whether to invest in the purchase of a big home or large piece of land. Each has their own advantages and disadvantages, and those with the income or financial ability to consider either are turning toward financial advisors to help them make the decision. While seeking sound investment advice is always a great start before settling on one decision, consider the following pros and cons in terms of going after a big piece of property or a slightly more luxurious home.

Big Land

Finding a large piece of land at an affordable price is always a great investment. Big land offers owners many more choices in terms of how the land is managed. Owners call sell land back to the market when values are high, never having developed it for residential or commercial use. Likewise, land can be developed for commercial or residential use, making it an even more profitable investment during a housing crisis and down economy.

Leasing land for agricultural purposes will help owners avoid property taxes with the possibility of inviting extra revenue through farm subsidies. A big piece of property can also be leased for housing development, earning additional income through monthly rental or leasing payments. A property that could eventually hold restaurants or retail shopping, for example, can generate substantial income and value for buyers that choose to develop in this way.

Big Houses

Investing in a bigger home is especially easy in the current market. Due to the millions of foreclosures that occurred throughout the United States as a result of the housing market crisis, large homes can be found in some markets are going for 30%, 50%, and sometimes 70% off their original price. These massive savings mean buyers can rent these homes out more easily (and at a more price-friendly rate), expand the physical home cheaply, or sell the house back at a profit when the economy rebounds.

Purchasing a big home below its once-high market value also simply allows one to live in a large, luxurious, spacious home without breaking the bank. While property taxes are inevitable, the savings incurred from purchasing a foreclosed home can make them worth it. A big home can be purchased for an array of strategic interests, and buying while real estate has decreased in price gives buyers a distinct advantage.

No matter which choice buyers go with, there is always a risk in investing. These investments specifically may take longer to pay for themselves if the market for real estate or commercial development has shrunk. It might equally take longer to find a bank or lender willing to assist with a purchase at a low interest rate. Before making any large, long term investment, it is wise to consider all methods that will be of the most financial benefit. Financial advisers and development firms are likely to offer varying perspectives on these, depending which route a buyer decides to go. Regardless of these varying perspectives, buyers must always take due time and research before settling on anything that sounds too good to be true.

Angie Picardo is a staff writer for NerdWallet, a personal finance website dedicated to helping customers find the best credit cards.

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