Commercial investors profit on undeveloped land plots

Undeveloped land plots have been sold for higher prices than when purchased.

Many investors who principally invest in commercial real estate properties took advantage of inexpensive land plots in recent years, and are now selling them for significant profits, Reuters explained.

The undeveloped areas were often in bankruptcy, and investors obtained them in large quantities. However, some investors decided to make a return on the properties, and these have sold for significantly more than purchased – as much as 20 percent or higher, the news source noted. The housing market improved across the country over the past couple of years, and foreclosure levels tapered off this year. These signals could help increase prices further for these properties.

"We are coming out of the mother of all housing cycles, and residential land is the best way to play the ultimate recovery," Michael Barr, a portfolio manager for Paulson & Co, told the news service. "Land is the highest returning component of the home building equation."

Some commercial property managers looking to develop land for housing may have to spend more for undeveloped land plots than at previous junctures, as the report added that investor-purchased properties already have building permits approved, in many instances.

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