The February LANDTHINK Pulse revealed that 83% of respondents now think land is the best long-term investment asset to own. Our survey revealed that they prefer to invest in 5 acres of land compared to stocks, gold, or Bitcoin. Mortgage rates are rising, inflation is soaring, and many experts are forecasting a recession may soon be on the way. Despite these negative impacts on the real estate market, land remains America’s favorite long-term investment.
Last month, the February Pulse asked: Which asset would you rather own?
For most people, land will always be more desirable than stocks, gold, or Bitcoin. Land is a tangible asset that provides shelter, utility, and income potential. Everybody can easily understand the fundamentals of land real estate, which is why many prefer it over other assets.
The runner-up in this survey was 150 shares of Apple stock, which garnered 8% of votes. Compared to land, stocks provide no utility. You can’t enjoy your stocks or raise a family in stocks. Further, a stock’s value can disappear overnight.
The barrier to entry to get into stock market investing is practically zero. Now, all someone needs is a few bucks and access to the internet to start investing in the stock market. When anybody and everybody can buy stocks, stocks simply becomes less desirable. On the other hand, when there is a beautiful parcel of land with a pond that offers many opportunities for recreation, of course the desire for such a property will be higher.
Owning land is a lot different than owning stock. Land is an illiquid, long-term investment. Unless you are buying productive farmland and leasing it to farmers or purchasing mature timberland, you likely won’t see a return on it until you sell.
There are numerous benefits to buying land that make it a smart investment. For starters, it’s less expensive than purchasing a property with a structure already built and it offers landowners a blank canvas to construct or recreate however they like. Not to mention there aren’t as many carrying costs, such as a mortgage, utilities, or insurance (plus the property taxes are much cheaper as well).
Investing in land is easy to understand. Once in a while, land buying can be complicated but the basics are simple: Purchase a property, manage upkeep, and you can most likely resell it for a higher value down the road. Also, owning a tangible asset can make you feel more in control of your investment than buying slivers of ownership in companies like Apple through shares of stocks. Additionally, there are tax benefits to land as opposed to other assets.
The current TTM dividend payout for Apple (AAPL) as of March 27, 2023 is $0.92. The current dividend yield for Apple as of March 27, 2023 is 0.57%. But the con to stocks is that they are volatile, which can mean a more risky investment. You have to consider capital gains tax as well. Stocks can be easier to get into with less money, but it requires a greater capital investment to see your portfolio grow in a significant way.
Given the unrest in our society these days, people that invest in land could use it to go “off the grid” should the need arise. Only a parcel of land big or small provides a place to find peace and serenity.
The third and fourth runners-up in our informal survey, at 6% and 3% respectively, were 10 ounces of gold and 1 Bitcoin. The top benefit of investing in gold is that your investment is very flexible. You can purchase any amount of gold depending upon the amount of money you have to invest. There are a lot of factors to consider when buying physical gold like storage, insurance, manufacturer, and purity. That sounds like too much of a hassle to a lot of people. But for those who want a little gold in your investment portfolio, consider investing in stocks, mutual funds and exchange traded funds (ETFs) related to the gold industry.
Volatility is one of the most important elements why people hate Bitcoin. The price of Bitcoin can change by 10% on a daily basis. Age is associated with the comfort level for investing in cryptocurrency. For older generations, fear is holding them back. There are two reasons people fear cryptocurrency: they don’t understand it and it could lose its value. For some, the Bitcoin pros outweigh its cons. The return on Bitcoin since 2010 has been nothing short of mind-boggling. Buy 1 Bitcoin today and in 2 months you will be able to buy 15+ acres of land. By year’s end, 50+ acres. Next year, 100+ acres. Bitcoin will have more than doubled and an acre will have dropped 1/4 – 1/3 in value. Land will never outpace the growth of the number one asset of all time, and there isn’t another investment or asset class that’s come close to its return in such a short space of time.
Historically in land real estate, your risk of loss is minimized by the length of time you hold on to your property. When the market improves, so does the value of your home, and as a result, you build equity. With the stock market, the high risk level never changes and there are all sorts of factors beyond your control that can negatively impact your investment. Investing in land and other types of real estate gives you more control of your investment because your property is a tangible asset that you can leverage to capitalize on numerous revenue streams, while enjoying capital appreciation.