Buying land is an entirely speculative game– if you bought land in California in the 1970s, you may be reaping the rewards; but if you bought that same land in 2006, it’s worth just a fraction of what it once did. Real estate investors see buying land as one of the biggest risks in the business. While development companies with long-term goals and a diversified portfolio might find the risk worth the reward, others might just plain lose. There is a low rate of return– stocks, bonds, and other investments often yield better results.
Why is it a risky investment? Because, after buying it, you still need to pay for it through insurance and taxes. That means that you’re losing out on other capital gains that stocks and bonds could bring, while also risking the land itself losing value over time. What do you think? Is it worth the risk?