Purchase Land & Make it an Asset, Not a Liability

Land ownership is one of the sure fire ways to increase generational wealth, however, one must understand that simply purchasing land doesn’t make it an asset because if the land isn’t useful, it can also become a headache that makes you lose money over course of time, also known as a liability.

Below are some ways to give yourself a better shot at purchasing freehold land property that may become an asset to you and your posterity.

Freehold versus Leasehold Property

Freehold is the best type of property one can hold in the USA and around the globe . When a person owns freehold, it means that both the land the property sits on and the property itself along with the airspace that is immediately enclosed in it, they own. It is their own private property and they are fully responsible for it all and control it all. Not only that, freehold ownership appreciates much better can be passed down to heirs as well as easier to resell.

Leasehold means that only the property on the land belongs to the owner, but land does not. It’s leased. It is leased for a stated period of time. Leaseholds can have restrictions, and they also must be renewed. Depending on the contract, any properties on the land could potentially even be lost depending on many factors. Also leaseholds don’t appreciate as well as freeholds.

Land Search

Next, when looking for your land to purchase, try and find land that will appreciate well over time. Some things that will create good land appreciation predictions are: new urban expansion, natural resources and/or new infrastructure. Gaining knowledge about plans and purchases in the area with the government and other companies and migration patterns can assist a potential land owner when deciding to invest in land.

Your land purchase must generate value, so you want to also be sure the land isn’t worthless. Therefore, you want to stray away from purchasing land that is contaminated, too many land restrictions and that may not have good access to the land (land locked) or may even be a potential flood/fire hazard.

It is land purchases like those just mentioned which are not assets to the buyer. These purchases can easily become liabilities. Being stuck paying taxes on land that never brings in revenue and can be a drain on finances due to not only paying taxes but the upkeep of the land itself is something that no landowner wants to climb out of.

Therefore, know that buying land is one thing, but using good judgement when buying land makes a difference in that land becoming an asset or a liability over time.

For more on land ownership, see some of the Black Entrepreneurs of History who did the same such as Philip A. Payton (Father of Harlem), Hannah Elias, Ottowa W. Gurley(Founder of Black Wall Street), Lt. Colonel Allen Allensworth and Free Frank McWorter (Founder of New Philadelphia, Illinois).