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Land Prices Now 40 Percent of Rental Home Costs

By: Gregg Cohen, CEO, JWB Real Estate Companies
October 31, 2014
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Investors are attracted to the real estate market partly due to the fact that homes increase over time in value. While the average home price has fallen in recent years, the costs for land have increased in most U.S. markets. Land prices are now 40 percent of most rental home costs nationwide; however, new investors interested in reducing upfront expenses when buying a rental home could benefit from the information in the video on this page.

Lots and Acreage Increase Equally

Someone purchasing a new home in a subdivision or on a corner street lot often pays for the location in the final selling price. The accepted price has a lot to do with the street value of the land where a property is positioned. Subdivided lots might not have a lot of acreage although these types of lots are valuable to realtors and investors. Lots that can be acquired cheaply are almost always a great investment for anyone in the housing market.

The nationwide average land size for a rental home is now .15 acres. Homes that are positioned on much larger lots will always command a higher price. New constructed homes that are built on less expensive lots can be cheaper for an investor. This is because of the appreciation value of land year after year in most growing cities. Paying too much for land is a drawback for some property investors due to little to no industry connections.

Saving Cash When Buying an Investment Property

If a home is positioned on a relatively new lot, few investment dollars will be needed to get the home into a market ready state. Too many real estate investors build homes on undeveloped land and spend upwards of 40 percent of start-up cash getting the land into a condition required by building codes. Connections to sewer systems, septic systems and other drainage systems is almost always complete with a built for rent market property.

Someone who is ready to invest in a home can have a lot of questions about how to reduce the expenses that come with homeownership. The guide available for access from this page explains the concept of buy and hold real estate in the rental market. Brand new homes purchased on developed land that are positioned in a growing neighborhood often make the best real estate investments for new property investors nationwide.

 

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