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Investing in Plot of Land

Plot Land InvestmentInvesting in plots of land for sale in the UK has proven a wise choice over the last few years. With uncertainty and volatility in the global stock markets following the September 11th terrorist attacks, the gains that have been made on the markets since this period have been poor in comparison to previous years. Further to this, when you consider that investing in land is a far smaller outlay than investing in property, but has seen much more significant gains over the last 20 years, it is clear why more and more people are diversifying their portfolios and turning their backs on traditional investments and purchasing land.

Without some expertise and knowledge of the markets, it is very difficult to make large returns when investing in stocks and shares. Investing in blue chip companies may be seen as a safe way to house your money, but the returns you'll see are likely to be fairly small. At the other end of the spectrum, investing in start-up companies and those companies on the alternative investment markets can deliver very substantial returns on your initial investment. However, such companies are few and far between and a great deal on research and then some speculation is required before investing in the right company, after which luck can play a major role. So, when faced with the option of what to invest in, a novice investor can lose their money very quickly, or invest in a 'safe' option that may still experience problems and lose value. In order to make decisions based on sound judgement, an investor needs to employ a broker, financial advisor or invest a lot of their own time into research.

In comparison, investing in land is simple. Land prices are unlikely to decline in the coming years, due to the fixed supply of land and the ever increasing demand for houses. Land agents and bankers choose the land they sell carefully, giving it the best possible chance of obtaining planning permission, which will result in windfall gains for the investor. In the event of planning permission not being granted to a plot, the investor can still expect to see substantial returns, even over a period of only 12 months.

A further advantage of investing in land is the lack of maintenance costs required, in comparison to those associated with investing in property. When investing in property, the initial outlay tends to be much more than an investor would pay for a plot of land for sale in the UK without planning permission. Typically, the investor will also choose to renovate the property at further expense to him/herself with no guarantee that they will make this money back in the eventual sale, and this outlay is likely to run into the thousands of pounds. Purchasing investment land does not require any further outlay for value to be added to the plot, the intrinsic value of the land and the ever growing demand for it will continue to push its value upwards in the coming years.

Another traditional form of investment in the property sector over a number of years has been the buy-to-let market, where investors have purchased property and made profits for renting out at levels over and above their mortgage repayments plus maintenance fees. Recent reports, however, suggest that the boom years in buy-to-let are over. The number of buy-to-let mortgages rose by 50% in 2001 as people looked to profit from soaring house prices and growing demand for rented property, loans worth £6.6bn were taken out for buy-to-let mortgages in the same period, and loans to buy-to-let investors more than doubled from £3bn in 1999 to account for 4% of all mortgage advances in 2001. Since the boom in this period, the market has been somewhat flooded, and although buy-to-let is still an attractive option, it can't promise the overnight returns it once did. Furthermore, as well as being a longer term investment, buying-to-let can cause any number of problems and it can be a job in its own right maintaining your investment and ensuring your tenants look after the property. In comparison, investing in land may is quite simply worry free, and a one off payment ensures the quality of your investment remains constant for its life-cycle.

-  James M

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