It is desirable to invest in high growth land that is relatively close to the point in time that it will be purchased by the final user. This emphasizes the critical importance of timing in land investment.
High growth land is known for intense speculation and development activities wherein investors expect changes in land use relatively soon, like re-zoning agricultural land for residential, commercial, or industrial purposes. Land values surge rapidly during this stage. The peak of this value growth is reached when the economics no longer support further increases in value. For instance, housing developers may realize it’s only viable to pay $25,000 per acre for land meant for subdivision into homesites, which can then be sold for $100,000 each based on the area’s property values.
The key to successful land investment lies in being able to identify the onset of a high growth phase. If land is purchased too early, it may take a long time before it appreciates significantly in value. Conversely, waiting too long to invest may result in a lower appreciation rate and potentially not achieving a satisfactory return on investment. Recognizing the right time to invest in land involves researching local plans, having a good understanding of the area, and using common sense to assess the likelihood of development based on various factors such as topography, growth rate, transportation systems, zoning, land values, soil conditions, drainage, utilities, and other relevant considerations.