Here are five simple strategies owners can implement to generate vacant land income. While vacant land isn’t usually used to generate revenue, it certainly generates costs – such as property taxes, weed abatement, fire protection, security fencing and other expenses. If the land is well-located, an investor could certainly sell it, but what if they want to keep it? Perhaps the land has been in the family for generations and there are strong emotional ties to it. Maybe the land is on a community growth path that is likely to substantially increase the land’s value as a long term real estate investment. Perhaps the investor has other uses for the land. Whatever the reason for keeping it, generating income in the short term can be beneficial.
Here are five strategies to generate vacant land income without a huge additional investment.
- Seasonal Lease. Many organizations and businesses lease land on a recurring seasonal basis for activities such as pumpkin farms, Christmas tree farms, summer camps, day camps, retreats, corporate meetings, and other outdoor activities. With the right zoning, permits, insurance, and minor structural accommodations, it may be possible to lease vacant land in a manner similar to a vacation condo.
- Agricultural Lease. If the land has the right zoning, soil, sunlight, and other factors conducive to growing small root crops (not trees), investors may find farmers willing to work the land for a number of years without greatly altering the surface or adding structures that might be expensive to remove later.
- Lease for Retail/Office. If the investor has no plans for the long term use of the land, they can derive income from it with a land lease entered into with someone desiring the location for retail, office or other purposes. Most tenants will want a lease equal to or greater than the economic life of the structure they intend to build, typically 30 to 40 years. By leasing the land as-is, investors can derive rental income from the land without having to share the costs of any improvements.
- Golf Courses. Many private golf course developers and municipal golf courses obtain the underlying land for their course on a long term lease. These leases are usually conditioned on use of the property as a golf course, thus ensuring the course operator can’t re-purpose the land during the lease period. Golf courses are relatively easy to convert to other use since so much of the space has been cleared.
- Government Facilities. State, county and city governments often lease land to reduce their capital expenditures, typically for government offices, maintenance facilities, and schools. For example, many of the public schools in Palo Alto, California are set on land leased from the Stanford Trust (same organization that owns Stanford University).
These are just a few examples of how we can generate vacant land income. Drop me a line if you have any questions regarding buying or selling California lots and land.