Buying a big tract of🅘 undeveloped land is an option open to the wealthiest investors. People with a more modest stake can earn a reasonable return by investing in land that is already real𝓡izing its potential.

The categories, broadly speaking, include residential, commercial, and agricultural uses. But that breaks down into many options for the investor, from mine𒁏ral-rich lands to vineyards, livestock ranches, and residential developments.

The investment vehicles include real estate investment trusts (REITs), exchange-traded💜 notes (ETNs), and exchange-traded funds (ETFs)⛄.

Types of Land Investments

There ar🅰e 10 general ﷽categories of potential land investments:

• Residential development land
• Commercial development land
• Row crop land
• Livestock-raising land
• 澳洲幸运5开奖号码历史查询:Timberland
• Mineral production land
• Vegetable farmland
• Vineyards
• Orchards
• Recreational land

Residential and Commercial Land Investments

Residential and commercial land development offers a feasible entryway into land investment because an unlimited number of opportunities can be structured to meet an investor’s capital and time constraints.

Real estate investment trust exchangeಌ-traded funds are a good choice. They do not require direct management by the investor, they are broadly diversified by property type, they are geographically di𝕴versified, they can be purchased or sold on a real-time basis, and they are affordable for the small investor.

Some specialize in a type of real estate, but others, such as the Vanguard REIT ETF (VNQ), provide diversified exposure to industrial, office, retail, healthcare, public storage, and residential property developments.

Of course, these types of investments don't grant the investor the right to use the land. If you dream of running a vineyard or digging for gold, these hands-off options are not for you.

Farmland and Livestock Operations

Land purchased for row crop farming or runni🍌ng a livestock operation gives the investor a hands-on option.

It's not an option for everyone. The scale required to operate a row crop operation or livestock operation has to be very large to be financially viable. It demands a significant upfront capital outlay far beyond what most people can afford. 

Moreover, the ongoing 澳洲幸运5开奖号码历史查询:fixed costs associated ꩵwith rཧunning these types of farming operations are high.

This means that the financial leverage and 澳洲幸运5开奖号码历史查询:business risks for such operations are very high as well. The stress level can far exceed the benefits that people ye🦹arn for as landowners. 

While owning a traditional row crop or livestock farming operation is probably not feasi💧ble for most small investors, many agricultural investment options provide acceptable investment exposure to traditional farming enterprises. 

Your choices include funds that provide exposure to soybeans, corn, wheat, cotton, sugar, coffee, soybean oil, live cattle, feeder cattle, cocoa, lean hogs, Kansas City wheat, canola oil, an🧜d soybean meal. 

ETN Options

A number of 澳洲幸运5开奖号码历史查询:exchange-traded notes (ETNℱs) invest in specific types of traditional far𓄧ming operations. 

For example, the iPath Bloomberg Agriculture Subindex Total Return ETN (JJA) provides investment exposure to 澳洲幸运5开奖号码历史查询:soft commodities such as corn, wheat, soybeans, sugar, cotton, and coffee. The iPath Series B Bloomberg Livestock Subindex Total Return ETN (COW) provides investment exposure to cattle and hogs.

Investors need to perform 澳洲幸运5开奖号码历史查询:due diligence before choosing this type of fund. Some use 澳洲幸运5开奖号码历史查询:derivative instruments such as 澳洲幸运5开奖号码历史查询:futures contracts, adding to the level of risk in the investment.

The r𓆉ight ETFs or ETNs offer a good opportunity for investingﷺ in traditional large-scale farming operations.

Small Farm Investment Opportunities

For small investors who want to truly engage in land ownersh🌊ip, the options include timber farms, mineral development lands, vegetabl🅠e gardens, orchards, vineyards, and recreational land. 

The scale of the land purchase can be tailored to meet the investor’s capital constraints. These operati🔯ons have the potential to generate an ongoing income st🐠ream.

With that said, a host of ETFs and ETNs are directly tied to these types of farming endeavors. Small investors could consider this hands-off option if they don't want to commit all of their time and resources.

The Invesco MSCI Global Timber ETF (CUT) is designed to track the performance of timber companies around the world and includes holdings in firms that own or lease forested land and harvest the timber for commercial use and sale of wood-based products.

The SPDR S&P Oil & Gas Exploration & Production ETF Fund (XOP) is one of the many investment options that provide exposure to mineral land development.

Buying Row Land

If you decide to buy raw land for potential development, be prepared to deal with legal and regulatory iss🌱ues. Some of the potential barriers to land de🦋velopment include:

• Land-use restrictions that curtail how the land can be used by its owner
• Land 澳洲幸运5开奖号码历史查询:easements that grant access to the property to an unrelated party
• The 澳洲幸运5开奖号码历史查询:conveyance of 澳洲幸运5开奖号码历史查询:mineral rights that can grant authorization to extract and sell minerals from the land to an unrelated party
• Riparian and 澳洲幸运5开奖号码历史查询:littoral rights that define the access that the landowner has to adjacent waterways
• Restraints on development if the property lies in a flood plain.

All of these potential issues can be identified in advance of any purchase. The legal specification for a parcel of land can be found in a document known as a land deed. Deeds are usu𒁏ally available to the public via the Internet or can be obtained by visiting the land records and deeds division of the appropriate county clerk’s office.

In addition to legal issues, investors must consider the land’s access to basic utilities such as electrici𒊎ty or telecommunications and consider its distance from the nearest community.

Investors should also check the land’s annual 澳洲幸运5开奖号码历史查询:property tax obligation.

How to Value Land

Investors considering a raw land purchase are engaging in a 澳洲幸运5开奖号码历史查询:speculative investment. Undeveloped land does not generate any income. Any return on investment will come from the potential 澳洲幸运5开奖号码历史查询:capital gain when the land is sold. 

With this in mind, the 澳洲幸运5开奖号码历史查询:cost of debt for a farm real estate loan can 𝔉be used to help conduct a preliminary investment analysis. Like any loan rates, these change with the times.

Another major consideration is the c༺ost of development of a small farming operation.

澳洲幸运5开奖号码历史查询:Valuation reports are readily available and can be used to estimate the capital requirements of develo♎ping agricultural land. The agricultural departments of state universities are often a valuable resource.

An investor who wants to establish a timber farm, vegetable farm, vineyard, or orchard should be able to find a comprehensive and timely analysis that explains how to establish the operation, the amount of work involved, the capital outlay required, the length of time necessary to get a return on investment, and the likely return on investment that a small-farm operation can achieve over tim🐼e.

The Bottom Line

In most cases, buying raw land is an option for the very wealthy.꧂𒊎

Most of the rest of us can satisfy a yearning for land ownership by investing in productive land through ETFs and ETNs. Unlike raw land, they can immediately generate a reasonable return on investment without a subꦦstantial investment of time and money