Principles Of Timing Tax Advantages Financing Multiply Your Profits

Dated: 02/01/2018

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Sometimes referred to as the “donut,” transitional land typically refers to agricultural land or wooded property that is transitioning to a higher and best use such as municipal development, residential development, or commercial/industrial development. The investment into farmland or undeveloped land requires proper due diligence and typically thinking of a long-term strategy. The estimated value and price per acre of farmland or undeveloped land in the transitional market is varied and in today’s market covers a wide range. 

FACTORS AFFECTING LAND VALUES: The land real estate can increase and shift in value for a variety of reasons. Typically, these changes are induced by new zoning, expansion of roads i.e. Southern loop of I-540 and US 64, installed utilities and new developments which spur more developments. Developers will base their offers on two factors how much density and cost to install supporting infrastructure which will determine the landed lot cost. The lot cost, as well as the economic value for the surrounding area, will determine the price point for the housing market for the Builder/Developer group. 

TRANSITION PERIODS:  When land goes from a non-use to being used or from a limited-use to a higher and best use, there are increases in property value. Owning land in this transitional period is vital to a higher multiplier of profits. The transverse will occur when improved property which goes unchecked and that lack of awareness results in a negative use will adversely affect property values. 

TAX BENEFITS: There are several tax advantages your investment into transitional land will have. Taking advantage of these benefits is key to real estate investments. Whether you are leveraging your purchase, utilizing a 1031 exchange for capital gains, or considering the variety of deductions to a hedge against inflation – transitional land represents one of the best opportunities for profits when appurtenances that qualify for depreciation are considering. 

KNOWING THE RIGHT BUYERS: One of the most important factors in realizing higher profits is working with the right buyers at the right time. Whether they are investors, developers, builders, businesses or the end-users of the land, consulting with a land brokerage firm and land adviser with a network of these buyers is another key to success. 

FINANCING TECHNIQUES: While every buyer of investment land and transitional land has a unique set of financial circumstances, there are many nuances to financing that factor into greater resale profits. From prepaid interest and interest only financing, savvy transitional land investors are very successful at pyramiding the profits from a land investment into greater and greater profits.All said, the major emphasis on transitional land investment should be timing. A great first step is to build a relationship with those that are knowledgeable in the local land real estate market. Keep in mind that your land broker regularly works with buyer and sellers who have a successful track record in long-term planning to realize transitional land profits.

All said, the major emphasis on transitional land investment should be timing. A great first step is to build a relationship with those that are knowledgeable in the local land real estate market. Keep in mind that your land broker regularly works with buyer and sellers who have a successful track record in long-term planning to realize transitional land profits.

HTR Commitment:  HTR is an independent company with local roots and national branches through its membership Referral Exchange, a network of over 20K licensed agents in all 50 states. HTR has strong working relationships with area builders, developers, businesses and city/county/state government officials. As the leading experts in farmland and wooded property sales & auctions, we provide a complete range of services in the acquisition and sale of your unique land and agricultural investments. HTR believes Customers First is the winning solution! No real estate transaction is too large or too small for the HTR team! For more information, visitwww.HTRRaleigh.com

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About the Author: Greg Buscher is a graduate of Florida State University and Land Broker with HTR Capital Group, LLC specializing in Home and Land sells in the Triangle area. See additional commentary on issues important to Home and Land in our community and the strategies for maximizing values at: http://gbuscher.myhtrraleigh.com/blog.php/  https://www.facebook.com/GregBuscherRealEstate/ or contact Gregory Buscher  directly at 919-795-9720 or email [email protected]


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Gregory Buscher

Anyone who knows me will tell you I have never met a stranger. I enjoy getting to know people and helping them however I can. That’s what prompted me to change career paths and become a Licensed R....

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