Is North Carolina Land a Good Investment?

North Carolina's diverse landscape and growing economy have made it an increasingly attractive destination for land investors. From the scenic Blue Ridge Mountains to the pristine Atlantic coastline, the Tar Heel State offers a variety of opportunities for those looking to purchase raw land. According to the North Carolina Department of Agriculture and Consumer Services, the state boasts over 8.4 million acres of farmland, accounting for 27% of its total land area, presenting significant potential for agricultural investments. 

The North Carolina Association of REALTORS® reports that land sales volume increased by 12% in 2023 compared to the previous year, indicating a robust market. Additionally, data from the U.S. Census Bureau shows that North Carolina's population grew by 9.5% between 2010 and 2020, outpacing the national average and suggesting continued demand for land development. As we explore whether North Carolina land is a good investment, it's important to consider these factors alongside the state's economic trends and land-use regulations.

The Allure of North Carolina Land

What makes North Carolina enticing for land buyers? Here are some of the key factors:

• Natural beauty. From the Blue Ridge Mountains to the Outer Banks beaches, North Carolina's landscapes attract vacationers and nature lovers. Plots with views or recreational access can draw higher prices.
• Population growth. North Carolina has fast-growing metro areas like Charlotte, Raleigh and Greenville. More residents means more demand for housing and commercial development which can increase land values over time.
• Business climate. Major companies like Bank of America and Lowe's have headquarters in North Carolina. The state's moderate taxes and sensible regulations appeal to business.
• Affordability. Land in North Carolina costs less than many other East Coast states. The bargain prices allow buyers to get more acreage for their investment.
• Diversified markets. Land buyers can choose from major cities, small towns, suburbs, rural areas and tourist destinations based on their investment goals.

Factors Impacting Land Values

While North Carolina offers reasons to be bullish on land, prices fluctuate based on various factors:

• Development demand. Land close to growing cities like Charlotte gains value from its development potential. Rural land far from infrastructure is harder to build on.
• Local zoning laws. Counties and towns regulate what can be built through zoning. Know the rules before buying land intended for construction.
• Access. Land near major roads and highways has higher visibility and convenience for future development. Remote tracts can be difficult to access.
• Terrain and topography. Flat, open land is easier to build on than steep hills or swampy areas. Geography impacts land's suitability for construction.
• Utilities. Land with existing electric, water and sewer access is more valuable than properties needing infrastructure built. Underground surveys may be needed.
• Economic trends. When the economy weakens and development slows, demand for vacant land may cool off and lower prices.

Risks of Owning Land

While real estate is often considered a safe investment, land has unique risks to understand:

• No cash flow. Land itself does not produce income while owned, unlike rentals. Profits only come from selling at a higher price.
• Property taxes. Even undeveloped land incurs annual county property tax bills that lower net returns.
• Maintenance costs. Land still requires expenses like brush clearing, tree removal and fencing that add up yearly.
• Market uncertainty. Land takes longer to sell than homes, and nationwide factors like mortgage rates impact prices and demand.
• Zoning changes. Local governments could re-zone land bought for certain uses into something else, restricting intended development plans.
• Environmental issues. Contamination, flood zones, erosion and protected species can complicate plans and turn vacant land into a liability. Due diligence is critical.

Timing the Purchase

Given the volatility and peculiarities of the land market, when is the ideal time to buy?

• Near growing suburbs. Areas at edge of expanding cities where land is still cheap but likely to develop soon.
• During stronger economy. More companies expanding and people buying homes raises demand for building land.
• Lower interest rates. Cheaper financing spurs construction, lifting land prices. But rates are rising lately.
• After deep discount. Sometimes distress sales or heirs liquidating estates offer bargain prices to opportunistic buyers.

Selling Land Profitably

Profiting on land investment requires the right exit strategy. Owners have several options:

• Sell to developers. Land suited for construction gets highest prices from builders planning housing or commercial projects.
• Parcel off smaller lots. Dividing larger tracts into individual lots tailored for homes opens up more buyer pool.
• Sell to other investors. Some specialized land buyers seek development opportunities or simply buy at good prices hoping for future gains.
• List for sale by owner. DIY sales avoid commissions but require time and marketing expertise to attract qualified buyers.
• Land buying companies. Selling for immediate cash to a company like Land Boss avoids wait but may sacrifice maximum sale price.

Perks of Investing in North Carolina Land

North Carolina offers many benefits that make it an attractive state for land investment. Here are some of the top perks to consider.

Population and Job Growth

North Carolina has been one of the fastest growing states in the U.S. over the past decade. Major metro areas like Raleigh, Charlotte, Greensboro and Durham have seen sizable influxes of new residents looking for homes and jobs. This steady population growth leads to increasing demand for residential and commercial real estate development which can raise land values. Major employers like financial services and tech companies are also expanding in North Carolina, bringing new high-paying jobs. More people with bigger paychecks stimulates real estate markets.

Affordable Prices

Despite the growth and economic strength, North Carolina land prices remain very affordable compared to many other East Coast states. Investors can acquire more acres for their money. Undeveloped land in North Carolina costs nearly 50% less on average than land in neighboring Virginia. This allows buyers to get more property for building houses or commercial space. The relatively low prices provide room for land values to rise.

Geographic Diversity

From the Atlantic coastline to the Appalachian Mountains, North Carolina offers geographic diversity for different lifestyle needs. Investors can choose land in bustling metro areas, quaint small towns, rural farming regions or vacation destinations. This variety caters to all types of real estate buyers. The mix of mountains, Piedmont and coastal plains also yields many beautiful vistas and recreational acreage.

Business-Friendly Environment

North Carolina policies create an appealing climate for companies. Corporate taxes are lower than most states. Construction permitting is efficient. Right-to-work laws limit union power. Major bankers like Bank of America and innovators like Apple already have extensive North Carolina presences. This business-friendly legal environment bodes well for ongoing economic growth and real estate development in the state.

For these reasons, North Carolina land can offer savvy investors long-term potential. The market dynamics, affordability and appealing quality of life are persuading factors. With proper research and preparation, land ownership in North Carolina can produce solid risk-adjusted returns.

Final Thoughts

While buying vacant land is not without risks and downsides, properties in strategic North Carolina locations offer appealing upside potential for patient, informed investors. With thorough research, realistic expectations on timeline and costs, and an effective selling plan when the time is right, land can produce solid returns and become a valuable portfolio diversifier. As with any real estate, heavy due diligence is required before taking the plunge into a North Carolina land deal. But for opportunistic investors, the Tar Heel State holds promising possibilities.

Frequently Asked Questions (FAQs)

What kinds of land are best for investment in North Carolina?

Land near growing cities like Raleigh and Charlotte offers good potential. Areas already zoned for housing or commercial use are preferable. Proximity to major roads, utilities and infrastructure boosts value. Geographic appeal also helps for recreational properties.

How much does vacant land cost in North Carolina?

Prices range widely based on location and market conditions. Rural farmland can sell for $2,000 - $5,000 per acre. Suburban land near cities goes for $10,000 - $100,000 per acre. Prime parcels in core urban zones can top $1 million per acre.

What risks come with buying North Carolina land?

No immediate cash flow during ownership, possible zoning changes, market uncertainty, costs of taxes/maintenance, environmental issues, and lack of infrastructure access are some of the key investment risks. Proper due diligence is crucial.

How long does it take to sell North Carolina land?

Average time on market is 1-2 years for vacant land. Parceling into smaller lots, hiring a broker, and marketing to developers can help land sell faster. Remote or undevelopable land may take much longer to find buyers.

What are property taxes like on NC land?

Typical property tax rates range from 0.85% - 1.15% of assessed value. Some counties even exceed 1.5%. These recurring taxes eat into net returns, so factor them into your projections. Agricultural lands get lower tax rates.

‍