You know the old saying “money doesn’t grow on trees,” well it turns out you can purchase land (with trees) that cash flows. So maybe the money doesn’t actually grown ON the trees, but the land that houses the trees can put money in your pocket every month.
10 Ways To Cash Flow Land
I’m becoming more and more intrigued by land as a cash flowing investment. Mostly because there seem to be some truly passive ways to create cash flow from land.
Any investment that can create cash flow while appreciating in value, with practically no involvement from me, is very attractive to me.
1. Sell the land with seller financing
This seems to be the most common process for cash flowing land, but I’ll be honest, there’s a scummy feel to it.
It goes like this.
You sell your land and have the buyer make a down payment. You then allow the buyer to pay off the remaining balance through monthly payments.
This is where it gets a bit sketchy. In your contract, the land will be repossessed by you if the buyer fails to make payments. And from what I read online, this seems to be the most likely outcome.
You essentially become the bank and finance the purchase of your own land, and if the buyer misses payments you reclaim the land and sell it to someone else.
This method is described by Jack Bosch and Kris Kemp. The good news is that you can do this and still profit if the buyer makes all their payments, so your profitability doesn’t depend on buyers defaulting on their loan.
One of the most common uses for land is farming.
Sure, you can go ahead and plant crops on your land and get into the farming business. But many farmers don’t actually own the land they farm on.
This means there’s an opportunity for land owners to lease their land to farmers. They will cultivate and maintain the land and pay you every month for the right to use your land.
This is the same business model that long term rental investors use.
4. Timber harvesting
Timber is a valuable asset used to construct homes and businesses, and some land is full of this resource.
Again, you could choose to take on the mantle of harvesting and reselling the wood yourself, but you can also work with companies that already do this. They can come to your property and harvest the timber.
You can share in the profits of their sales or you can lease the land to the company.
5. Hunting leases
For land owners that have a lot of acreage and plenty of wildlife, leasing your land to hunters can be one way to cash flow your land.
I found an article that suggests the average income in one year from hunting leases for qualifying land in Missouri is around $12 per acre, which comes out to around $1 per month per acre.
This isn’t a huge amount, but other areas may have higher rates, and hunting leases can be done very passively. There is no upkeep for the owner, and you can use websites like huntingleasenetwork.com to find hunters to lease your land.
6. Mineral rights
Mineral rights are the right to harvest an area for the resources it contains, but mineral rights can be separated from land ownership. A land owner can sell or lease the mineral rights of his or her land to someone else.
Timber isn’t the only valuable resource that can reside on or under vacant land. Companies that mine oil, natural gases or precious metals rarely own the land they mine. This again presents an opportunity for land owners.
Not only can you lease or sell your mineral rights, but you can also get royalties from the resources on your land and share in the profits.
7. Outdoor advertising
Have you ever seen billboards on the side of the highway during a road trip? Of course you have.
What you may not have realized is that whoever owned that billboard probably didn’t own the land it was built on. While a company will pay the billboard owner to put their advertising up, the billboard owner is probably paying a land owner.
8. Green energy
Utility companies sell energy, and some of the more modern ways of creating energy require lots of land.
Windmills need to be placed on large flat surfaces with lots of wind, and solar panels also perform well on large areas that get lots of sunlight.
Utility companies may pay to rent your land to place these energy producing assets.
Idea: You may not be able to get a utility company to lease your land to use for green energy production. However, most utility companies will credit your account if you sell energy back to them. For someone like me, who pays utility bills for several Airbnb rentals, putting my own solar panels up and selling back can significantly lower my utility bills.
Another type of business that requires vacant land are cell phone network providers. They need land on which to build their towers.
This is comparable to many of the other ideas on this list. A company pays you a lease fee to use your land. The cell phone company builds and maintains the tower and you do nothing but collect their lease checks.
10. Create a service
I’ll admit, it doesn’t seem easy to connect with all these companies and farmers and convince them to start leasing your land. So, what are some ways that you can create something yourself that will produce income?
Here are my ideas.
You could build a storage facility on the land. Climate controlled units in my area rent for $80 or more per month. It’s not cheap to build a storage facility, but once you do this would be an excellent source of income.
If your land is near anything that draws a lot of cars, then a parking lot could make for a great source of cash flow. Near sports stadiums, downtown areas, and event venues would be great areas to consider building a parking lot.
If your land in zoned to allow for apartments or other multi-family real estate, then you could create some serious cash flow by building and leasing out those units.
Mobile home park
Everyone living in a mobile home park pays rent, even if they own their mobile home. They pay rent to the owner of the land to park their mobile home on it. To set up a mobile home park you would need to have utilities set up for the whole area.
Campgrounds are the short term rental version of a mobile home park. If your land has good places to hike or beautiful scenery, then a campground could be a good candidate. You can avoid setting up sewer at the camp sites, but you’ll probably need electric throughout the area.
Another idea is to set up outdoor sports fields. I don’t know much about this, but I do know it requires plenty of land. I’m sure you could create cash flow with fields set up, but you might have to jump through some hoops to get your leagues moving.
I also found a great article with a list of even more ideas for cash flowing vacant land.
As always, due diligence is of the utmost important in making profitable investment decisions.
While many investments are straightforward (you rent out property to cash flow), land seems to require more creativity to create regular income. The ten ideas above I’m sure only represent a small slice of the possibilities.
I’d love to hear from those who have had experience cash flowing land. What’s worked for you?