Have you just acquired vacant land? This can cost you a lot, depending on where you bought the land. After that initial cost, you might consider making the land profitable to offset the price. So, how do you make the land pay for itself?
You can earn passive income on your land by hosting a billboard, selling timber, leasing it to farmers, hunters, or developers, using it for pasture, leasing it for solar and wind energy installation, and leasing mining rights. The land resources, size, and location will determine how you use it.
However, be careful when leasing the land out as its use can affect its long-term value. You need to make sure the purpose isn’t illegal and won’t damage the land. It helps to have an expert go through lease agreements before you sign. Here, we discuss how you can make the land pay for itself.
Ways To Earn Passively on Your Land
If you’ve just bought land and are thinking of making a profit on it, you’re unlikely to be thinking of investing more money. In that case, there are still several ways you can use the land to make money to cover its costs over time. Such ways include:
1. Host a Billboard
If your land is in a strategic location, such as near a busy road, it could be a good spot to place a billboard. Ad agencies and companies pay premiums for this kind of location. There are usually several terms and conditions for this kind of deal. The amount you’ll earn will depend on the size of the board, traffic count in the areas, advertising rates, duration of the agreement, etc. If you have a land with a great spot, you can contact the advertising agencies yourself.
2. Sell Timber
When you buy forested land, you could make money off it by selling the timber. Lumber companies will pay good money to harvest wood on your land. But if you’re planning to do this, make sure the trees have matured. The older the forest, the more value its trees will command. So you may have to wait a few years to let the trees reach maturity before you start considering lumber companies. You may also have to make inquiries at your state Department of Conservation to get more information on selling your timber.
3. Lease your land to farmers
Do you have an arable piece of land or one that’s good for rearing animals? You can lease it to farmers. Farming itself is capital intensive, and it’s unlikely that you’ll be able to start one yourself. But there are agricultural companies and large-scale farmers that’ll help you put your land to good use.
Even if the land isn’t so good for plants, it could be a place to rear livestock. Livestock doesn’t necessarily have to be ones you’re familiar with, such as poultry, cattle, and the likes. It could be bees. Beekeepers can use your land for their colonies. Lands next to an orchard or plants that are attractive to bees would be great in this case. You only need to advertise your land with its qualities. When it comes to land for farming, the bigger the land, the better.
When leasing it to farmers, your land doesn’t have to be permanent farmland. If it has good pasture, it could be grazing land for livestock such as cattle, sheep, and horses. However, using your land as pasture could come with damage to the land over a long period. This is especially so when the farmers don’t practice sustainable grazing.
5. Lease to Hunters
For those who own a large tract of land with wild game in it, you can make the most of it by allowing hunters to use it. Hunters will pay a lot of money to hunt on your land. You need to be familiar with the hunting restrictions in your area. Go to the local wildlife department to make some findings. You also have to ensure the hunters on your property have hunting permits. Thus, this arrangement might require a more hands-on approach.
But you can always work your way around that by hiring someone to be in charge. It’s also better if your land has some accommodation on it. So, you may need to build a cabin and provide electricity and running water. This small investment won’t go to waste as it’ll attract more people. However, consider conservation when using your land as a hunting site.
6. Solar and Wind Energy Installation
Sustainable energy is the fad these days, and you could make money from that with your land. If you own a large tract of land in a suitable location, you can lease it to energy companies. Solar energy investments might be too capital intensive for you when trying to offset the cost of purchase. But these companies have deep pockets and investors backing them. When they install a solar farm on your land, you can expect to earn significantly off it for the duration of the agreement.
The same thing goes for wind farms in high wind areas. You need to prove that your land is viable for the project.
7. Mining development
If you’re one of the lucky ones with land that contains mineral resources, you’re in luck. The landowner owns the mineral rights, and you can always sell your rights. Depending on the mineral on the land, you could become a millionaire by selling the mineral rights. You can also choose to lease the mineral rights, in which case you’ll get part of the profits from the mineral.
Should you discover mineral resources on your land, you’ll likely need professional advice on dealing with them. While extracting mineral resources could make you rich, it could also render the land useless. So, ensure the miners use the most sustainable practices. Even with that, there are still risks.
8. Lease to developers
A large tract of land or even a small lot in a good location can earn you a good income when you lease to developers. Every developer needs good land. So you have an advantage that you can leverage to get a great deal. Instead of selling your lend and just collecting the one-time fee, leasing lets you get a recurring fee while it also develops. Over time, the value of the land can appreciate significantly above what you’re even getting from the lease.
When you want your land to pay for itself, the best way is to lease it. Leasing ensures you earn some fee on it while the land appreciates. You need to make sure your lease agreement is well-drafted. Also, ensure sustainable use of your land during the lease.
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