SOMETHINGS THAT MAY SURPRISE YOU
Recreational land is land that is used for exactly what it sounds like.
Various types of recreational uses include hunting, weekend getaways, fishing, ATVing, family retreats, and so much more.
While recreational land has a number of personal and financial benefits, they’re not always realized.
Many people purchase vacant land for its potential agricultural and residential value.
However, recreational land has numerous advantages that shouldn’t be overlooked.
While people don’t invest in recreational land for pure financial benefit, the opportunity to gain income as well as use the land for entertainment provides many reasons to purchase.
Here are the top benefits of buying recreational land.
1. RECREATIONAL LAND PROVIDES TAX DEDUCTIONS
Did you know that owning vacant land has tax benefits?
If you’re looking to invest in vacant land to use as recreational land, then you should know about the different items that can provide you financial benefits.
The purchase of vacant land does not immediately create income.
In fact, it often creates an expense.
You’ll have to pay property tax, interest, and other carrying costs.
You may be able to deduct these costs under certain circumstances.
When you invest in recreational land, you’re not in the business of buying and selling vacant land on a continuous basis as a real estate investor would be.
Instead, you’ll likely hold this recreational land to not only use, but also in the hopes that it will appreciate in value.
When it comes time to file taxes, you’re eligible for investment expenses that are deductible as personal itemized deductions on Schedule A.
These expenses are ordinary tax deductions that give you tax benefits at your regular income tax rate.
They may be as high as 39.6 percent (or even higher if you’re subject to the new Medicare net investment income tax).
Interest that an investor pays on money borrowed to purchase vacant land is considered investment interest.
This can be deducted as an itemized personal deduction.
2. IT CAN BE A “HANDS-OFF” INVESTMENT
In many ways, recreational land is a “hands-off” investment.
You don’t have to deal with tenants, lawn-care, leaking roofs, bursting pipes, or anything else that doesn’t directly benefit what you’ll be using the land for.
Now, you may choose to add some of these features, which means you’ll need to invest in maintenance.
However, if you want to use your land for hunting or camping, then you’ll only maintain it to the extent that you need it to be maintained.
Beyond that, you’re free to live your life and use your recreational land as you see fit.
3. ONE OF THE BEST THINGS ABOUT RECREATIONAL LAND - IT HAS THE POWER TO MAKE YOU HAPPY
It can be used for camping, fishing, hunting, ATVing, hiking, and other activities that get you outside and into nature.
If these are some of your favorite activities, then purchasing recreational land will give you the opportunity to participate whenever you want.
Getting out in nature also makes you happier and healthier.
You’ll boost positive emotion and have a number of physical and mental health benefits.
4. RECREATIONAL LAND IS AN INEXPENSIVE LONG-TERM INVESTMENT
When you buy vacant land to use as recreational land for the right price, you make an inexpensive long-term investment.
Think about it.
There are no mortgage payments to make (depending on whether you took out a loan or not).
There are no utility bills to pay.
Property insurance is low.
Even property taxes can be cheap (in the right area).
If you’re looking for somewhere to invest your cash and have it continue to appreciate value, then land is the right investment vehicle.
You can watch our video below on the top three mistakes made when purchasing vacant land if you are actively shopping.
5. RECREATIONAL LAND IS A VALUABLE RESOURCE
Land is always a valuable investment because it is an essential natural resource that there will never be any more of.
While most people don’t think of vacant land this way, it’s true that land is extremely valuable because there are limited quantities available.
It’s not like you can just “grow” more land.
It’s a finite asset that others will want when there isn’t any more available to buy.
So, by purchasing it, you’re putting yourself in a position that is advantageous long-term.
You’ll not only purchase something that you’ll love and use as a source of entertainment, but you’ll also hold it as an investment for a long period.
6. IT IS SAFE AND CONSISTENT
When you think about the risk associated with recreational land, the truth is that there is very little that exists.
Land is a long-term, tangible asset.
It doesn’t fall apart or wear out.
For the most part, nothing gets stolen or broken or destroyed.
If you use the land in its pure form, then you don’t even have to worry about maintaining features on the land (buildings, plumbing, etc.).
And especially when you purchase recreational land at the right price and complete your proper due diligence, you’re getting all of these benefits at no risk.
There are few investments you can say that for.
7. RECREATIONAL LAND CAN BE USED FOR FAMILY BONDING
Why do people buy vacation homes?
Why do families head to national parks each summer?
Because they want one central place that their family can gather in the great outdoors.
If your family loves to congregate and enjoy nature, then recreational land is a fabulous way to do that.
You can unplug, slow down, and spend time with one another without any distractions.
Whether you’re looking forward to camping, hunting, fishing, hiking, ATVing, playing sports, or doing something else in the great outdoors, your own recreational land can be the perfect place to do it.
Say goodbye to extraneous camping, hunting, or fishing fees.
You can now use the land for as long as you want to for just your family.
8. IT MAY HAVE TIMBER
Did you know that some people buy recreational land from timber companies?
This is because timber companies own thousands of desirable acres of land in the country.
If you choose to buy from one of these companies that has experience in selling to recreational users, then there are some things you’ll want to know.
You may still be able to profit from timber in the future.
Before you buy, see if the company’s timber experts can help you with a long-term plan on how to use your rural property for recreation (factoring in your expected cash flow from timber harvesting).
If you have a well-thought-out timber management plan, then you’ll be able to use your timber profits to make improvements to your property in whichever way you see fit.
Make sure you work with a timber company that has experience selling to recreational users.
This is important because you want to make sure you get a proper title and that it accurately represents all the timber on the property.
You can also work with us as --- your local real estate broker to help avoid some of the pitfalls that comes with this process.
It’s wise to speak with local experts on how a timber company has works if you’re going to buy land from them.
This will ensure that your investment has been taken care of, and you’ll be able to use the land for everything that you want to use it for.
9. RECREATIONAL LAND MAY PROVIDE RENTAL OPPORTUNITIES
Are you considering renting on your recreational property?
Whether you purchase the land initially thinking you want to rent to other people, or it comes about over time, rentals (in some form) can help provide additional income.
For instance, if you use your land as a campground, allowing other individuals or families to use it for a small price can provide a financial benefit.
Don’t overlook the ways that you can use recreational land to your advantage.
Hunting, ATVing, fishing, sports fields, and more also provide opportunities for you to use your land to make a small profit while also using it yourself.
Of course, if you begin to rent out your land, you may need to consider additional expenses that will come with that.
Will you need a property manager?
Will your rentals only be available seasonally?
How much maintenance will your rentals require?
Will this help you gain income?
How will it impact your taxes?
Do the research and think about whether you can make money on your vacant land! It’ll be worth it in the long run.
10. YOU CAN GET A TAX DEDUCTION BY DONATING A CONSERVATION EASEMENT
If you are buying land purely for recreational purposes, you may not mind giving up your development rights by donating a conservation easement.
These easements prevent development on the property in order to preserve nature, but don’t restrict you from using the land in ways that won’t conflict with the conservation goals of the easement.
In exchange, you could be eligible for a tax deduction of 50% of your income for up to 16 years.
Should this not be enticing enough, a nonprofit may even be willing to buy a conservation easement from you if you would prefer an upfront lump sum.
11. IT IS AVAILABLE IN A VARIETY OF AREAS
There’s vacant land for sale all over the United States that you can purchase whenever you’re ready.
In fact, some cities even give away FREE land.
Do your research today!
You may have recreational land just waiting for you, and you didn’t even know it.
All this said, there are a few things to note before you purchase recreational land.
For one, the success of recreational land as an investment is a bit different than other types of land, like residential land or agricultural land.
It’s not measured by how much you make off of it (although, that’s always a benefit) or the number of crops that it yields.
Recreational land is successful if you spend a lot of quality time using it.
If you’re looking to buy recreational land in your area, you may consider looking for the following.
First, start with the zoning regulations and restrictions.
This will impact what you’re able to do on the land.
If you want to purchase land for hunting or building cabins to rent, then you’ll need to make sure that the land is properly zoned for it.
The county planning or building department can help you understand what your property is zoned for.
Simply put, don’t purchase land without knowing its zoning!
Beyond that, you’ll also want to look at the land critically.
Is it big enough? Will it support what you want to do?
For example, if you want to use the land for hunting, but don’t see animals, water sources, food plots, cover, or anything else that would make it an ideal place to hunt, then you may want to pass on the land.
If it’s not passing these initial “inspections,” then it’s unlikely to be good for what you want to use it for.
Finally, think about where it’s located, the neighborhood, and its surroundings.
If the property is part of a managed neighborhood, the parcel of land is not going to be good hunting land.
However, it may make for a good cabin location.
It’s all about considering where the land is located and even how the neighbors may impact you or the success of what you may end up running on the property.
12. RECREATIONAL LAND CAN BE USED FOR WHATEVER YOU WANT
Ultimately, the benefit of recreational land is up to you.
You could purchase it and let other people enjoy the property and its amenities for free or for a fee.
You could also improve the property and set it for a profit down the road.
Or maybe you’re just looking for a nice retreat for your own family.
Plenty of people invest in recreational land so their family can have a place to camp, hunt, or enjoy themselves away from the rest of the world.
They never intend to sell it and rather hope to pass it down from generation to generation.
The real benefit of recreational land?
You’re not fenced in by anything at all (except maybe government regulations that you can check BEFORE you even purchase the land).
It’s all yours!
FINAL THOUGHTS
Recreational land doesn’t cross people’s minds as an investment nearly as often as residential or agricultural real estate.
Why?
Because it’s simply not as common.
However, if you have a hobby that requires recreational land anyway then it may be the perfect investment for you.
The above benefits demonstrate how buying recreational land can improve your personal and professional life.
So what do you want to do with your new land?
We’re here to help throughout the entire land buying and selling process!
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