Sunday, August 2, 2015

Investing in land

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Author and radio talk show host Dave Ramsey.
Author and radio talk show host Dave Ramsey.

Dear Dave,

What do you think about land as an investment?

-Tara

Dear Tara,

More coverage
  • More financial advice from Dave Ramsey
  • I'm okay with the idea of raw land as an investment. Someone has to buy the dirt that holds the earth together, right?

    The only problem with this kind of investment is that it doesn't really create cash flow, unless it's farmland. In the real estate world, we call raw land an alligator because it eats. You have to pay taxes on it every year, plus you have upkeep and maintenance of some form or fashion, and it doesn't create an income. The only time it creates income is on the back end, when you sell the land.

    It's not a terrible investment, Tara. But it's not a great one, either. I buy pieces of raw land here and there, every once in a while. But mainly I stick with income-producing investment properties.

    -Dave

    Dave Ramsey is America's trusted voice on money and business. He's authored four New York Times best-selling books: Financial Peace, More Than Enough, The Total Money Makeover and EntreLeadership. His newest book, written with his daughter Rachel Cruze, is titled Smart Money Smart Kids. It will be released April 22nd. The Dave Ramsey Show is heard by more than 6 million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.

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