Is Land a Good Investment?

Tara asks what Dave thinks about land as an investment.

QUESTION: Tara on Facebook asks what Dave thinks about land as an investment.

ANSWER: Land is a fine investment. Somebody needs to buy the dirt that holds the earth together, so I’m good with that. I own some raw land. Raw land doesn’t obviously create cash flow unless it’s farmland, and it creates some cash flow then. In the real estate world, we call raw land an alligator because it eats. You have to pay taxes on it every year, and you have to pay whatever the fence rows are to keep up if you mow it or whatever else or anything you to do it, so it does not create income. The only place it creates income is on the back end where you sell it.

I buy a few pieces of raw land here and there, but I mainly buy income-producing investment property.