Why Do People Buy Land?

Nick Hopp
Iowa Land Specialist

From beneficiaries wanting to buy out their siblings in an estate to savvy investors seeking the best returns for their cash investment, the question of why people buy land is a common one. Whether it’s for personal or financial reasons, purchasing land remains a popular investment choice for many. But what drives these decisions?

While the financials can be complex and challenging to quantify, historical data and the psychology of land buyers provide valuable insight. Below are the top three reasons why people continue to choose land over higher-return investments:

1. Land is a Stable Investment

Land has long been considered a stable, reliable investment. For buyers looking for a long-term hold, land offers consistent growth. While the price of land can fluctuate due to external
factors—such as market conditions, location, and demand—historical data has shown a steady appreciation rate, and tillable land offers an annual dividend (in the form of land rent) of 2-5% annually for Midwest tillable land. This consistent return on investment (ROI) is one of the reasons why many land buyers continue to trust land as a safe investment vehicle, even when other investments offer potentially higher short-term returns.

2. Land is Tangible

One of the key benefits of land is that it is a physical, tangible asset. Unlike stocks or digital investments, land provides buyers with a sense of control. Investors can make decisions about rental rates, influence the farming operations, and decide when to buy or sell based on market conditions. While real estate is generally less liquid than other forms of investment, the trade-off is the level of control it offers the owner. The ability to physically manage and enhance the property adds value that appeals to those who prefer more hands-on investments.

3. Land is a Leverageable Asset

Another major advantage of land as an investment is that investors can leverage it. Whether purchasing land for farming or as a financial asset, buyers benefit from financial institutions viewing tillable land as attractive, stable collateral. This perspective allows landowners to access financing more easily since the property’s consistent income—such as rental or farming revenue—provides a reliable revenue stream. Other types of investments may not offer the same opportunity for collateralization, making land an appealing choice for buyers looking to maximize their financial leverage.

Conclusion

While this article should not be considered as financial advice, it’s clear that land ownership offers unique benefits that many other investments may not provide. The stability, tangibility,
and ability to leverage land make it an attractive option for both personal and business
investments. Whether for long-term growth, control over an asset, or as a financial tool forborrowing, land continues to be a valuable investment choice for many buyers.

Do you want to learn more?

If you’re considering buying or selling land, reach out to a local High Point Land Company agent. For more questions regarding land real estate, visit our YouTube Knowledge Center!

With seven years of full-time experience as a land specialist in Iowa and South Dakota, Nick Hopp has distinguished himself as a leading expert in the field. Nick has successfully facilitated the sale of thousands of acres, setting numerous township and county records through his adept use of proven auction and real estate strategies. If you are interested in selling your farmland, call Nick at 319-240-6121 or email him at nick@highpointlandcompany.com