westviewbestview1It feels like everyone and their mother and their favorite podcast host is talking about making passive income through purchasing real estate. All you hear about is how great it is, and how they’re making so much money without the struggle of grinding 9-5. But what do you not hear much about? How they’re actually doing it. Well, never fear, the land experts are here! There are just about countless ways to make passive income off of your land, but for the sake of time, we’ll go through just a few ideas with you. Hopefully you’ll find one that works for you, and start making money off your land before you know it!
(As a quick caveat that we will re-emphasize here and there, you will need to make sure your property is properly zoned for your intended use. We at Westview Land recommend executing thorough due diligence and working with your local county/city planning commission to ensure you are adhering to all local zoning and building regulations.)
1.) Building a structure to rent out
Now, this seems to be what most people do think of when it comes to making money off real estate. There’s a good reason for that, renting out residences to tenants tends to have a high return on investment over time. However, do keep in mind building on raw land is a big undertaking. There will be income, but it may not be as passive of an income stream as you expect.
You’ll need to pick a property that is buildable. You’ll then have to acquire permits and invest in the structure being developed, including potentially utilities and infrastructure, and then you’ll need to maintain the residence for tenants while ensuring your tenants pay every month.
At that point, your payoff will be considerable, but that will be after investing a lot of time and money yourself. You’re welcome to do such, but if you’re looking for an opportunity that’s a little more passive, you could always try…
2.) Ingress/Egress
So, first things first, you better have a property with access itself, otherwise you’ll need an easement yourself, and that starts negating the point. It needn’t be a particularly large, flashy, or even buildable property. What you do need is a property with access that is desirable for other property owners in the area. Let’s say there’s a large parcel behind yours. It looks great to build on, but it doesn’t have road access.
The only thing standing between this property’s potential build is your property, literally. This can work in your favor. If you want to reach out to the neighboring property owner yourself, or if you’re approached by them, you can certainly offer them access via your property, but for a price. Make sure you negotiate fairly, and get everything cemented in writing. Then, you can sit back and watch the grass grow as you make passive income off your land.
3.) Billboard advertising
If you’ve purchased land right next to a major road or highway, you may be wondering if it can have much use at all. It sure can! That is prime advertising space for billboards. You can rent out the billboard advertising space to companies for a fee.
Now, as mentioned, we always recommend land buyers execute thorough due diligence. If you have a property in mind for billboard advertising, talk with your local planning department to make sure the zoning and building regulations allow for it. There are specific regulations for billboard advertising. For instance, Maine, Vermont, Alaska, and Hawaii have outlawed billboard advertising. Then, the Highway Beautification Act of 1965 created stricter regulations for where billboards can be pleased, and have spacing requirements. While inconvenient for you, it prevents you from being bombarded with billboards as you make your commute.
After you’ve found the proper property to place your billboard, you now have to ask yourself what kind of billboard you want. You can create a simple wooden structure for a couple thousand dollars, but if you want something more sturdy, like something built with steel, the cost is going to increase. Of course, the more you invest, the more solid your investment will be, literally. You can also just have the billboard company build the billboard if the numbers make sense.
4.) Paid parking
We bet you never thought you could make money from watching cement dry. If you have land that you use for paid parking space, then can do just that!
(Check with your planning department and get permits! This will be your biggest obstacle to face with this method.) Then, throw some asphalt on that baby, install paid parking machines, or hire an attendant if you like to keep things old fashioned, and there you go! This will work best for properties in high trafficked areas and cities.
The beauty of this investment is that it doesn’t require much upkeep, especially if you choose the option of automated machines to take parking payments. That way you won’t even have to collect change periodically.
5.) Solar power
Unless you’re living under a rock, then you already have a resource available with the potential to earn passive income off of- sunlight! The beauty of this is that all land sees the sun (though if you are located in the Polar North, we might recommend looking into other methods of passive income.)
Make sure with your local planning department that you are permitted to install solar panels on your property, but so long as that’s allowed and you get the proper permits, there’s a real opportunity here. Most people want land with public utilities already available. The demand is significantly lower for properties without access to local power, and typically the prices reflect this. That’s where you swoop in and find some acreage at a great deal.
According to Forbes, “Solar panels cost, on average, about $16,000, or between $4,500 to $36,000 depending on the type and model as well as any inverters and the BOS, or balance of the system that includes any equipment that’s required to operate.” Though the amount will vary depending on what state you’re in, what type of panels you choose to use, and where you buy your panels from, of course.
6.) Wind farming
Don’t have a green thumb? That’s okay! Why harvest crops when you can harvest the wind? You don’t need any access to water, which often contributes to lower cost in buying a property, and there are no associated fuel costs. You do, of course, need to have access to a good bit of wind, so heavily treed properties or anything near a large geographical feature that blocks wind may not be your best bet.
Another beauty of utilizing wind farming, is that you’ve got a large audience to sell to. “Utility-scale, distributed, community, small wind and remote applications can be used for schools, tribes, municipal utilities, rural electric cooperatives, homes, businesses, farms, ranches, water pumping, ice making, and telecommunications sites.”
Now, we know what you’re asking yourself right now: “All of this is great to know, but how much exactly can I make from this?” According to windexchange.energy.gov “Revenue varies by region, but wind projects provide the communities in which they are located lease payments to landowners (~$3,000-$6,000/megawatt*), state and local tax revenues (~$7,000/megawatt), and employment.**”
**American Wind Energy Association. 2017. U.S. Wind Industry Annual Market Report, Year Ending 2017.
**U.S. Department of Energy. (2015). Wind Vision: A New Era for Wind Power in the United States.
7.) Campground
Are you a big fan of nature? Do you find value in all land? Well then, make “unusable land” work to your advantage. Live out the dream of starting your own campground to rent out to fellow nature lovers.
You can either have people just popping up tents and camping there, or, if you have the proper zoning and permits, you can also have a setup for RVs. While you won’t require a property with a residential zoning, you will need it to permit for some structures, such as an office or a building to provide showers. You will want to focus on more scenic properties. Not many people want to be camping on the side of a highway, at least, not the kind of people you want to be working with. Acreage is also a big factor, as you won’t have much success if you’ve got people camping on top of each other.
There will, of course, be some start up costs. You’ll need things like paved roads to get campers to their campsite, utilities, facilities, etc. Small Business Trends says, “The cost to create a campground can vary from $10,000 to $50,000 depending on land, and infrastructure needs.” That estimate does not include the cost of land. They also go on to say the average campsite yearly revenue is $75,000. So, when you carry the 1s and the decimals, it seems like campground land is a pretty solid investment- literally and financially.
8.) Seller financing
You can’t argue that the Steve Miller Band was onto something when they said “Take the money and run,” but it’s not always the best solution when selling land. Don’t get us wrong, we love a cash sale, but there are definitely perks to selling your land with financing such as…
A.) A constant stream of income. A big check is nice, but sometimes it’s better to have a smaller payment you can rely on every month.
B.) Cash sales prices are usually a little discounted. You can work around on price with the incentive of a fast close. But with financing? It’s pretty standard to raise the price, a little, as compared to the cash price.
C.) Depending on the terms of the sale, it’s pretty a safe investment. If you opt to do a contract-for-deed, then the property won’t be in your buyer’s name until it’s fully paid off. Therefore, if they were to stop making payments, the land would still be in your name.
So, when you start thinking about it, you just might be alright with constant, smaller payments to make passive income off your land.
9.) Grazing for cattle/horses rented
Got acres to spare? Are they zoned for agriculture? Then it sounds perfect for cattle grazing! You don’t have any cattle? Then you can either get some, or you can lease out your acreage to a cattle owner in the area. Let the grass grow and do the work for you!
This requires such a small amount of infrastructure. All you really need is access to water, and fencing. You’ll want a property with acreage, but not too much acreage, unless you enjoy tracking down cattle. This is also where you’ll see the upside of buying rural properties. While we won’t say there aren’t farms in more urban settings, there’s a reason you don’t hear people mooing at cows while in the middle of a city. So, take advantage of large plots with low prices in paths less traveled, and get to counting your m00-lah. Sorry, couldn’t help it.
10.) Event venue
In case you don’t know anyone who’s been involved in working events recently, let us be the ones to tell you that the industry is growing rapidly. Not only in pricing, but also in scale. Gone are the days of hosting parties and receptions in backyards with punch and refreshments. It’s all about doing the most. This creates an increased demand for venues to host these magical days, and that’s where you come in to make passive income off your land.
The best part? Most people like a fairly blank space so they can make their own vision come to life. That means a lot less work for you. Sometimes you don’t even need a structure- though you might want to have some tents and heating posts ready for the elements. Invest in a simple structure, parking, and a few employees to be available a few days of the week, and you’ve got a business with a firm foundation.
11.) Mineral rights
Did you know that some of the largest lithium deposits in the world were recently discovered under the Salton Sea? (Did you know we have a large selection of properties available right off the Salton Sea?) Did you know that you can use the minerals available on your land to make passive income? Well, now you do! If you have access to oil, gas, or other valuable minerals on your land, you’ve got an opportunity.
Now, this one is a little special. In order to conduct full due diligence, you will need to have a 100 Year Title Report conducted to ensure your property comes with mineral rights included. Occasionally the property’s legal description will state whether you have mineral rights, but not often, and with something like this you do want to be certain.
So, if you do discover that your property has mineral rights, and you’ve got something of value underneath that land, you have a few options. The more passive of the options are to either sell the mineral rights to your property, or lease them out. The much more active option is to help develop the minerals yourself.
https://www.kinneylawoffice.com/images/Documents/How_to_Profit_from_your_Mineral_Rights.pdf
12.) Cell phone towers
Can you hear us now? Good! Another option to make passive income off your land that most people won’t think about initially is leasing out your land to place cell phone towers. Now, we assume you’ve already called and check with the city or county to make sure that the zoning will permit for such a use, and also make sure that there aren’t any environmental factors in the way. If your land isn’t already cleared, it’s pretty certain you’ll need to get that done. Next, you’ll reach out to local cell service providers. Now, once these cell service providers get back to you, it’s time to talk the talk, and negotiate terms.
Look into the standard rates around you, this will help you determine market value. Keep in mind, there will be more value for service providers that don’t already have a large presence in the area. That’s where your negotiating power will lie. They have the demand, and you fulfill the supply. While also ensuring you receive fair compensation, you’ll want to make sure that the terms of the agreement ensure that you have full control over any changes to your land.
If all of this negotiating feels a little out of your comfort zone, there are people you can turn. Bell Carrington Price & Gregg, Attorneys at law, recommend using a cell tower lease consultant. “A consultant can provide valuable insights into the market rates for cellular tower leases in your area, as well as offer guidance on negotiating the lease agreement.”
So, once the contract is signed, it’s to sit back, supervise, and start reaping the benefits of making passive income off your land.
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