If you're a current or soon-to-be retiree, you’re probably looking for creative ways to boost your nest egg and gain future income. Many people choose to invest in rental properties in an up-and-coming area. But this kind of real estate venture comes with property management responsibilities, including constant calls from annoying renters about leaky faucets and squeaky door hinges. This is precisely why some retirees are opting to invest in vacant land instead.
Less kindly known as land speculation, purchasing vacant land for potential future gain is a high-risk investment. The secret is to find inexpensive land in undeveloped areas that may see a building boom in the near future. While choosing the right spot can be tricky, you could sell your land to a commercial real estate company or developer in the future for a major return—provided you play your cards right.
Thinking about placing your bets on a vacant lot? Here are five U.S. states where you can buy dirt-cheap land and where your investment may just pay off in the long run.
- Tennessee, Arkansas, West Virginia are three of the most inexpensive places where you can buy land.
- New Mexico and Arizona are popular places for retirees.
- If you plan to purchase land, make sure it's close to water and utilities.
- Land is the most illiquid form of real estate.
This landlocked southern state is most famous for its centrally located capital, Nashville. The heart of the country music scene is the home of the Grand Ole Opry, the Country Music Hall of Fame along with a legendary stretch of honky-tonks and dance halls. Memphis, located in southwest Tennessee, is another hot spot, where tourists flock to see Elvis Presley’s Graceland. The Great Smoky Mountains in eastern Tennessee, located along the North Carolina border, offer a peaceful area to fish, hike, and take in majestic mountain views. Tennessee also offers another major advantage—no state income tax.
Even with a variety of attractions, land in Tennessee is relatively inexpensive. For instance, in Unicoi County, located in the state’s mountainous northeast, the average sales amount for a 251,911 square foot lot is $59,408. That’s only $0.37 per square foot. As Tennessee continues to grow, you could potentially profit from a land purchase in the Volunteer State.
Known as the Natural State, Arkansas borders the Mississippi River and is well known for its abundance of outdoor recreation opportunities from fishing, hunting, and hiking to mountain biking, golfing, and boating. The state’s diverse geography includes mountains, dense forests, lowlands, lakes, rivers, reservoirs, and streams.
Arkansas also has a low cost of living, a growing economy, and a mounting population. The cheapest land in the Natural State can be found in Clay County, nestled in the northeast corner of Arkansas, where land sells for around $0.07 per square foot, with the average sale price of just $43,083 for an 830,617 square foot lot.
Situated entirely in the Appalachian region, it’s no wonder West Virginia is known as the Mountain State—the terrain is almost entirely mountainous. Harpers Ferry, located in the northeast part of the state where the Shenandoah River meets the Potomac, is a popular tourist destination. Site of the famous pre-Civil War raid by John Brown, the town is surrounded by a national historic park, with many of the buildings open to the public as living-history museums.
West Virginia's economy has had significant strides and is still growing. The largest industry in the Mountain State is still coal mining, which accounted for 98% of West Virginia’s growth. You can still find extremely affordable land in West Virginia. In Morgan County, just an hour outside of Harpers Ferry, a square foot of vacant land will cost you around $0.44. With an average lot size of 277,623 square feet, that comes out to $29,450.
Often called the Land of Enchantment, New Mexico boasts an array of striking landscapes, from the Chihuahuan Desert to the Sangre de Cristo Mountains. The southwestern state’s capital, Santa Fe, is a popular tourist destination well known for its upscale spas, magnificent Spanish colonial architecture, and vibrant cultural scene. This thriving city is home to the Georgia O’Keeffe Museum and the open-air Santa Fe Opera.
To top it off, New Mexico’s population and economy are on the rise. In other words, the Land of Enchantment could also be the land of opportunity for retirees looking to buy valuable vacant land. In Quay County, land hovered in the range of $1.96 per square foot, and the average land sale amount is $55,918.
Best known for its perpetually sunny weather and, of course, the Grand Canyon, Arizona has long been a hot spot for tourists craving a taste of the southwest. It’s also the sixth largest state in the U.S. with a rapidly rising population. Arizona’s job market is quite healthy as compared to many other states.
Even with those numbers, you can still score inexpensive land in the Grand Canyon State. In Santa Cruz County, located in southern Arizona along the Mexico border, the average price of land is $1.77, with an average sales amount of $45,420 for 91,088 square feet.
The Bottom Line
Even if you happen to find dirt-cheap land in one of these five states, remember that any land purchase is an exceedingly high-risk investment—especially for less experienced, short-term investors. Because raw land is the most illiquid type of real estate investment, it can take many years to sell some land parcels. Before you purchase a plot of land, carefully consider the area’s growth expectancy as well as all zoning requirements, topography, and tax obligations associated with owning the land. And make sure it has water and access to utilities if you hope to develop it.