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  • Refurbish/Develop

    Land Acquisition - A Good Investment?

    Hi All
    I am looking at various investment opportunities and had heard in the past that buying land achieved excellent ROI of around 30%. This is an area that I know nothing about so if there are any experienced investors who are currently investing in land then I would appreciate your advice on this. i.e. the process for locating land, things to look out for, land acquisition companies, etc.
    Crystal
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    Crystal,
    Tell us more about what you have heard. Any details would be helpful.
    Land can be very hit or miss. It ties up capital and rarely produces an income until something can be done with the land.
    When you say a ROI of 30% explain a bit more how the investment is structured. Return on the cash invested or some other calculation?
    John Corey
    Follow me on Twitter -> https://www.twitter.com/john_corey
    https://www.ChelseaPrivateEquity.com/blog
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    0

    John Corey 


    I host the London Real Estate Meet on the 2nd Tuesday of every month since 2005. If you have never been before, email me for the 'new visitor' link.

    PropertyFortress.com/Events

    Also happy to chat on the phone. Pay It Forward; my way of giving back through sharing. Click on the link: PropertyFortress.com/Ask-John to book a time. I will call you at the time you selected. Nothing to buy. Just be prepared with your questions so we can use the 20 minutes wisely.

    As I said John, I know nothing about land investment so I'm waiting to hear from those who are investing in land or who have done so in the past so that they can advise me. When I heard an investor talking about it I was not taking notes so I have no details.
    Crystal
    REI said:
    Crystal,Tell us more about what you have heard. Any details would be helpful.Land can be very hit or miss. It ties up capital and rarely produces an income until something can be done with the land.When you say a ROI of 30% explain a bit more how the investment is structured. Return on the cash invested or some other calculation?John CoreyFollow me on Twitter -> https://www.twitter.com/john_coreyhttps://www.ChelseaPrivateEquity.com/blog
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    Hi Crystal,
    My own view is that one needs to take a realistic look at development potential for one thing, and cash flow for another.
    John is quite right, of course. Once you tie capital up in land, it is locked in. That's OK perhaps for capital you can allocate for long-term gain, perhaps with a tax strategy linked to it, and maybe with a view to future beneficiaries too. It is as well to have a plan for wealth and income generation, nonetheless, with a projected timescale; but I expect you are well aware of this already.
    I think you can take '30%' with a generous pinch of salt. So much depends on the actual potential of any one specific individual piece of land, within the context of its surroundings. Most people tend to speculate over this. However, it is possible to make a realistic appraisal from known data, and take a lot of the guesswork out of the evaluation process.
    .
    Over what time period would one be measuring increase in value? One year? An average of 30% per annum over ten years? It is as well to write down specific goals and targets about such things, both to clarify one's own aims, and in order to create a measuring stick against which to evaluate a potential land purchase.
    I remember a spate of marketing a couple of years ago where companies were offering the opportunity to buy pieces of fields next to small towns on the grounds that it was pretty well certain that the urban envelope would expand to encompass these fields - an almost fraudulent claim, in some cases. We have to be careful what we include in our research, analysis and due diligence. Most of this is do do with understanding how the planning process works, coupled with understanding the driving economic factors that affect land values.
    Rather than generalise, I'll just speak about my own strategy, as I am not really experienced enough to give overall advice. I am a trained surveyor, horticulturalist, and garden & landscape designer. Hence, I use my knowledge in these areas to formulate my own strategy. This largely comprises two main areas: developing businesses in rural areas that result in planning permission opportunities; and looking out for properties with large gardens that can be developed. The former is too big a subject to cover here. The latter is much more straightforward.
    The classic small-scale land development opportunity is the house on a corner plot, with a large garden. That's where I would look, primarily. Especially now, when the current recessionary factors mean that property development is largely a no-no for builders, developers, and buyers too. However if you can find a house like this that you can rent out profitably in itself, but which also has potential to develop further within its grounds, you should have a safe investment, which makes you money monthly straight away, and which probably has future potential too.
    It is easy to find out about future potential: go and talk to your local planning officer. Consider what might be a sensible development (maybe an extension to the house, with a garage and a bedroom and bathroom above it). They will tell you straight away whether or not this is a realistic option to pursue. You can help your own cause too by having a careful look round the area to see where extensions may have been built already - which shows what the planner are likely to approve. You can model your own proposal on these.
    Planners do not like to make suggestions about potential development; they much prefer to give you a view on whatever you are considering; so think out a good realistic proposal first. You would be surprised how helpful they would be then - especially when you go to see them and ask for some informal general guidance and advice as to whether your idea looks basically ok in principle or not.
    Let us know how this grabs you. As John says, if you can let us know more about what you have in mind to do, there are several people on the forum who could probably give you an orientation, each from their own experience and perspective.
    If you need to know more about how to gain value in rural areas, this is probably best tackled in a separate thread - you can start one on that topic if you wish.
    By the way - you have a lovely name: can I ask, is it real? You're not really too good to be true are you?

    Brian Heath

    Wessex Property Management Services
    enquiries@wessexpropertysourcing.co.uk
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    I find that some investors who talk about returns do not know how to correctly do the math. They think they are getting a specific return but they fail to add up the figures correctly. Very common in BTL when people only remember the buy and sell price but none of the expenses.
    John Corey
    Follow me on Twitter -> https://www.twitter.com/john_corey
    https://www.ChelseaPrivateEquity.com/blog
    Crystal Diamond said:
    As I said John, I know nothing about land investment so I'm waiting to hear from those who are investing in land or who have done so in the past so that they can advise me. When I heard an investor talking about it I was not taking notes so I have no details.
    Crystal
    REI said:
    Crystal,Tell us more about what you have heard. Any details would be helpful.Land can be very hit or miss. It ties up capital and rarely produces an income until something can be done with the land.When you say a ROI of 30% explain a bit more how the investment is structured. Return on the cash invested or some other calculation?John CoreyFollow me on Twitter -> https://www.twitter.com/john_coreyhttps://www.ChelseaPrivateEquity.com/blog
    0
    0

    John Corey 


    I host the London Real Estate Meet on the 2nd Tuesday of every month since 2005. If you have never been before, email me for the 'new visitor' link.

    PropertyFortress.com/Events

    Also happy to chat on the phone. Pay It Forward; my way of giving back through sharing. Click on the link: PropertyFortress.com/Ask-John to book a time. I will call you at the time you selected. Nothing to buy. Just be prepared with your questions so we can use the 20 minutes wisely.

    I concur with all that has been said so far.
    Land is an increasingly scarce commodity - and where there is scarcity, there is value and money to be made.
    HOWEVER, there are many companies offering land acquisitions claiming great ROI. There have been many, many scams of companies offering parcels of land for small amounts of money, saying they are about to get planning permission. They never do.
    Land in the U.K. is highly protected and some areas may NEVER get planning permission, no matter what the economic factors are that would suggest it it likely.
    So, like anything, due diligence is key and must be done to a very in-depth level to ensure you do not end up buying a white elephant.
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    0
    Hi Brian
    Thank you for the information and advice that you shared. I will have to give this some more thought as to whether it will be a suitable investment option for me. Some time last year I was contacted by a man who I met at a networking event. He told me about his land investment opportunity. I don't have any details because I dismissed it at the time but I remember he said it was overseas (don't remember where) and I needed to put in just £20k for a massive return.
    Thank you. As for my name and whether or not I'm too good to be true - I shall leave u guessing on that one! lol
    Crystal
    Brian Heath said:
    Hi Crystal,My own view is that one needs to take a realistic look at development potential for one thing, and cash flow for another.John is quite right, of course. Once you tie capital up in land, it is locked in. That's OK perhaps for capital you can allocate for long-term gain, perhaps with a tax strategy linked to it, and maybe with a view to future beneficiaries too. It is as well to have a plan for wealth and income generation, nonetheless, with a projected timescale; but I expect you are well aware of this already.I think you can take '30%' with a generous pinch of salt. So much depends on the actual potential of any one specific individual piece of land, within the context of its surroundings. Most people tend to speculate over this. However, it is possible to make a realistic appraisal from known data, and take a lot of the guesswork out of the evaluation process..Over what time period would one be measuring increase in value? One year? An average of 30% per annum over ten years? It is as well to write down specific goals and targets about such things, both to clarify one's own aims, and in order to create a measuring stick against which to evaluate a potential land purchase.I remember a spate of marketing a couple of years ago where companies were offering the opportunity to buy pieces of fields next to small towns on the grounds that it was pretty well certain that the urban envelope would expand to encompass these fields - an almost fraudulent claim, in some cases. We have to be careful what we include in our research, analysis and due diligence. Most of this is do do with understanding how the planning process works, coupled with understanding the driving economic factors that affect land values.Rather than generalise, I'll just speak about my own strategy, as I am not really experienced enough to give overall advice. I am a trained surveyor, horticulturalist, and garden & landscape designer. Hence, I use my knowledge in these areas to formulate my own strategy. This largely comprises two main areas: developing businesses in rural areas that result in planning permission opportunities; and looking out for properties with large gardens that can be developed. The former is too big a subject to cover here. The latter is much more straightforward.The classic small-scale land development opportunity is the house on a corner plot, with a large garden. That's where I would look, primarily. Especially now, when the current recessionary factors mean that property development is largely a no-no for builders, developers, and buyers too. However if you can find a house like this that you can rent out profitably in itself, but which also has potential to develop further within its grounds, you should have a safe investment, which makes you money monthly straight away, and which probably has future potential too.It is easy to find out about future potential: go and talk to your local planning officer. Consider what might be a sensible development (maybe an extension to the house, with a garage and a bedroom and bathroom above it). They will tell you straight away whether or not this is a realistic option to pursue. You can help your own cause too by having a careful look round the area to see where extensions may have been built already - which shows what the planner are likely to approve. You can model your own proposal on these.Planners do not like to make suggestions about potential development; they much prefer to give you a view on whatever you are considering; so think out a good realistic proposal first. You would be surprised how helpful they would be then - especially when you go to see them and ask for some informal general guidance and advice as to whether your idea looks basically ok in principle or not.Let us know how this grabs you. As John says, if you can let us know more about what you have in mind to do, there are several people on the forum who could probably give you an orientation, each from their own experience and perspective.If you need to know more about how to gain value in rural areas, this is probably best tackled in a separate thread - you can start one on that topic if you wish.By the way - you have a lovely name: can I ask, is it real? You're not really too good to be true are you?Brian HeathWessex Property Management Servicesenquiries@wessexpropertysourcing.co.uk
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    Thank you. I totally agree.
    Crystal
    Vanessa said:
    I concur with all that has been said so far.Land is an increasingly scarce commodity - and where there is scarcity, there is value and money to be made.HOWEVER, there are many companies offering land acquisitions claiming great ROI. There have been many, many scams of companies offering parcels of land for small amounts of money, saying they are about to get planning permission. They never do.Land in the U.K. is highly protected and some areas may NEVER get planning permission, no matter what the economic factors are that would suggest it it likely.So, like anything, due diligence is key and must be done to a very in-depth level to ensure you do not end up buying a white elephant.
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    0
    Do be careful, Crystal. How do you manage a piece land abroad? Not so long ago, I was offered a piece of land in China.
    Needless to say, I turned it down.
    Keep shining,
    Brian
    Crystal Diamond said:
    Hi Brian
    Thank you for the information and advice that you shared. I will have to give this some more thought as to whether it will be a suitable investment option for me. Some time last year I was contacted by a man who I met at a networking event. He told me about his land investment opportunity. I don't have any details because I dismissed it at the time but I remember he said it was overseas (don't remember where) and I needed to put in just £20k for a massive return.
    Thank you. As for my name and whether or not I'm too good to be true - I shall leave u guessing on that one! lol
    Crystal
    Brian Heath said:
    Hi Crystal,My own view is that one needs to take a realistic look at development potential for one thing, and cash flow for another.John is quite right, of course. Once you tie capital up in land, it is locked in. That's OK perhaps for capital you can allocate for long-term gain, perhaps with a tax strategy linked to it, and maybe with a view to future beneficiaries too. It is as well to have a plan for wealth and income generation, nonetheless, with a projected timescale; but I expect you are well aware of this already.I think you can take '30%' with a generous pinch of salt. So much depends on the actual potential of any one specific individual piece of land, within the context of its surroundings. Most people tend to speculate over this. However, it is possible to make a realistic appraisal from known data, and take a lot of the guesswork out of the evaluation process..Over what time period would one be measuring increase in value? One year? An average of 30% per annum over ten years? It is as well to write down specific goals and targets about such things, both to clarify one's own aims, and in order to create a measuring stick against which to evaluate a potential land purchase.I remember a spate of marketing a couple of years ago where companies were offering the opportunity to buy pieces of fields next to small towns on the grounds that it was pretty well certain that the urban envelope would expand to encompass these fields - an almost fraudulent claim, in some cases. We have to be careful what we include in our research, analysis and due diligence. Most of this is do do with understanding how the planning process works, coupled with understanding the driving economic factors that affect land values.Rather than generalise, I'll just speak about my own strategy, as I am not really experienced enough to give overall advice. I am a trained surveyor, horticulturalist, and garden & landscape designer. Hence, I use my knowledge in these areas to formulate my own strategy. This largely comprises two main areas: developing businesses in rural areas that result in planning permission opportunities; and looking out for properties with large gardens that can be developed. The former is too big a subject to cover here. The latter is much more straightforward.The classic small-scale land development opportunity is the house on a corner plot, with a large garden. That's where I would look, primarily. Especially now, when the current recessionary factors mean that property development is largely a no-no for builders, developers, and buyers too. However if you can find a house like this that you can rent out profitably in itself, but which also has potential to develop further within its grounds, you should have a safe investment, which makes you money monthly straight away, and which probably has future potential too.It is easy to find out about future potential: go and talk to your local planning officer. Consider what might be a sensible development (maybe an extension to the house, with a garage and a bedroom and bathroom above it). They will tell you straight away whether or not this is a realistic option to pursue. You can help your own cause too by having a careful look round the area to see where extensions may have been built already - which shows what the planner are likely to approve. You can model your own proposal on these.Planners do not like to make suggestions about potential development; they much prefer to give you a view on whatever you are considering; so think out a good realistic proposal first. You would be surprised how helpful they would be then - especially when you go to see them and ask for some informal general guidance and advice as to whether your idea looks basically ok in principle or not.Let us know how this grabs you. As John says, if you can let us know more about what you have in mind to do, there are several people on the forum who could probably give you an orientation, each from their own experience and perspective.If you need to know more about how to gain value in rural areas, this is probably best tackled in a separate thread - you can start one on that topic if you wish.By the way - you have a lovely name: can I ask, is it real? You're not really too good to be true are you?Brian HeathWessex Property Management Servicesenquiries@wessexpropertysourcing.co.uk
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    I recently put some money into this company:
    https://www.ilandi.co.uk/
    I have had a number of meetings with the Director, and was very impressed with the quality of information and process he follows.
    I don't normally invest passively, but very good returns can be made with land, so I thought I would tie up a small amout of funds.
    I'm happy to report back to the group with the outcome (I went for the Dalshannon investment), which should have an outcome soon.
    Michelle
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    Michelle,
    Thanks for offering to update us as the deal progresses. It will be interesting to follow the story.
    John Corey
    Follow me on Twitter -> https://www.twitter.com/john_corey
    https://www.ChelseaPrivateEquity.com/blog
    0
    0

    John Corey 


    I host the London Real Estate Meet on the 2nd Tuesday of every month since 2005. If you have never been before, email me for the 'new visitor' link.

    PropertyFortress.com/Events

    Also happy to chat on the phone. Pay It Forward; my way of giving back through sharing. Click on the link: PropertyFortress.com/Ask-John to book a time. I will call you at the time you selected. Nothing to buy. Just be prepared with your questions so we can use the 20 minutes wisely.