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 cheap land and where your investment may just pay off in the long run.
- Tennessee, Arkansas, and West Virginia are three of the most inexpensive places to buy land.
- Texas is a popular place for retirees but not necessarily the cheapest place to purchase land.
- If you plan to purchase land, make sure it's close to water and utilities.
- Buying land near popular tourist areas will likely be more costly but you might see a stronger return on your investment.
- As an asset, owning 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. Vacant pastureland in the Natural State on average sells for around $0.06 per square foot according to 2021 data from the U.S. Department of Agriculture.
If you are planning to buy land to build your retirement home, make sure to check with the local community government to learn about building regulations for your property.
3. West Virginia
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 most of West Virginia’s growth. You can still find extremely affordable land in West Virginia. Depending on the location, the cost of an acre of land can be $1,000, and with only 7% of the state's land developed, there is plenty of opportunity for growth and profit.
4. New Mexico
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. Land currently available in New Mexico can be bought for an average of $1,500 per acre, and with the state ranking as having the second most available land, there are many opportunities for eager investors.
Land is illiquid and can be very hard to sell. If you are buying land as an asset to sell down the road, it can end up being a risky venture.
The second-largest state in the union, Texas offers outsized fun due to the variety in its terrain from wide-open prairies to golden beaches. It has a rising population, rich cosmopolitan meccas, and cultured college towns. Best of all, Texas has space, a lot of it, with seven district market regions to choose from when buying land, and prices do vary, depending on where you plan to purchase. For example, in the far West Texas region, the land is only approximately $1,300 per acre on average. If you have more money and want to retire close to a city, the Dallas-Fort Worth area costs on average $2,500 per acre, with a median price of $2,411 per acre.
Is Buying Land a Good Investment for Retirement?
Buying land and building a new home may be less expensive than buying a house, if you choose the right locale. However, if you are buying land as an asset, remember it can be a risky venture and take years to sell off and make a profit.
Which States Have the Cheapest Land?
According to Land Hub, Arkansas, Tennessee, and West Virginia have some of the cheapest land around.
Should I Buy Land When I Retire?
If you are planning to live on the land, it may be a good deal, especially in popular retirement states like New Mexico or Texas. For example, it is cheaper to buy land outside of Santa Fe or Fort Worth, than to purchase a new home in either city.
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.