Very few people wouldn’t love to own a spread of their own by the lakeside. While it’s a big responsibility, investing in recreational land is often written off, overlooked, and misunderstood.
The only types of smart land investments aren't in housing and commercial developments. Recreational land is that which is set aside for leisure purposes and can have an unforeseen return on investment. Your money is kept safe and increased due to value appreciation, with time when land is under the proper upkeep.
What Is Recreational Land?
Recreational land can be public or private and is usually zoned for campgrounds, parks, nature trails, hunting, or wildlife preservation. It can either be developed commercially and residentially or not, depending on local regulations. Due to such restrictions, many investors don't realize the value of benefits associated with this type of asset.
You can buy recreational land to have a place for a weekend getaway or to monetize the available resources for financial gain. Sometimes, such property can be used for agricultural purposes, or you can hold on to it until its value is high enough to resell.
Why You Should Invest in Recreational Land
Vacant properties are available all over the US, and here are five rock-solid reasons to invest in recreational land.
1. Tax Incentives and Benefits for Land Ownership
You may be aware that a single-family home, for instance, has tax benefits associated with it. What you may not know is that similar incentives are present for recreational land as well. Under certain circumstances, if you itemize your tax return deductions, the property's carrying costs such as property tax and interest can be deducted.
On schedule A of your tax filing, you are eligible for deductions on investment expenses. Unless you are a regular real estate investor, personal itemized deductions offer tax benefits on your regular rate of income. These can range from 39.6% to 43.3 for investors who are subject to net investment income tax under the new Medicare plan.
Any interest that you will pay on your loan borrowed to buy the recreational land will be considered investment interest. This is also part of an itemized personal deduction which is limited to your net investment income for that year. Such income can be arrived at by subtracting investment expenses from income.
There's also a way to earn value on conservation easements that you can donate, restricting development on your recreational land. Depending on their value, Easements can give you a 50% deduction on income for 16 years.
2. Lowest Price for Land Asset Buying and Maintenance
Recreational land is cheap compared to other forms of real estate investments. This land, on which you can make improvements, is also easy and affordable to maintain. There are no utility payments, so you're left with your monthly mortgage payments if you took a loan and property taxes.
Seeing as it's valued much lower than land that's been developed, your overall costs won't be high either. You can also let the recreational land sit, and with time, it'll accrue value.
According to one investment broker, recreational land offers opportunity gains for appreciation that are better than stock market returns. Property insurance for such land is also low, and taxes are subsidized in many areas.
3. Your Own Vacation Destination
Owning recreational land is getting a place where you can spend time in nature, which consistently increases your sense of well-being. Your mental health will be improved by the open spaces, while there's a sense of ownership pride to boot.
With recreational land, you will no longer pay to hunt or camp. That’s bound to work positively for your happiness and overall health.
When you need to get away from it all, your property can provide a sanctuary of peace and tranquility. This alone makes many investors buy recreational land so that they can have their little slice of paradise.
4. Valuable Natural Resources
Recreational land can have all-natural resources, including timber, camping grounds, or a lake where anglers flock. This is essentially raw land, and there are many avenues for revenue after you’ve taken note of the best use for the property.
Most vacant land is owned by absentee landlords who are often eager to sell it off. Logging companies will trade on land based on their market needs. Owning land in which there's timber makes sound investment sense. The key is to ensure that the woods and timber rights come with the property purchase and that the trees are indeed harvestable for sale to mills or other buyers. With some due diligence, investing in land with trees that can provide quality timber in the future can provide a good monetary return on your investment due to the rising Timber Prices. It is important to note that this can be done while promoting responsible forest management.
Put a management plan in place to ensure that you profit from the harvest once the timber is old enough.
5. You Can Rent it Out to Make Money
You can generate monthly income by letting out parcels of your recreational land. If the local zoning regulations allow, you can create campgrounds where you charge nightly camping rates. If your land has good hunting stock, hunters are ever willing to pay for productive game fields.
Another alternative is building a fishing pond and stocking it so that anglers can pay daily rates to fish there. Recreational land can support you financially while supplementing your table with game, fish, or other wild edibles.
Conclusion
Before buying recreational land, it's best to find out how the previous owners stewarded it. There are best practices of property management that keep the land healthy and usable, such as in providing viable wildlife habitat. With this type of property, you're assured of a good deal as there isn't much competition.
You can also grow crops on recreational land, depending on zoning restrictions. Another way of earning on your investment is to buy vacant land and sell it off at a profit when the market is ripe. Otherwise, your property is wide open for you and your family’s enjoyment, where you can fish, hunt or camp.