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Lease Out Your Land: 10 Steps to Passive Income

Leasing out your land can be a great way to generate income, but it requires careful planning and consideration of various factors. Overall, you must really understand your land use options and the market that would be willing to lease your land. You would be hard-pressed to just say 'land for lease'; in fact, most real estate agents will not give you the time of day to list it.



Unless you have super prime city property for commercial zoning, you're pretty much on your own to get this done. Is it possible? Yes, but you need to paint a picture for a prospective business or person willing to use it. Bring their business ideas to light, don't depend on them to make their own idea for your land. Sell a dream, basically.


Why Do People Lease Land

- Expanding farming operations, wineries.

- Commercial building.

- Storage space for RVs.

- Campground or hunting use.

- Recreational business, paintball park, RV rental fun, motorcycle course.

- Cell towers.

- Billboard signage.


A Comprehensive 10-Step Guide to Leasing Out Your Raw Land


1. Determine the Land's Best Use Again, you really must understand your land. Is it commercial, residential, agricultural? Why would anyone want it? What could they do with it? Assess your land's features and location first to decide the most suitable use for leasing and marketing. This could be for farming, grazing, storage, recreational activities, or special events like we said above.


2. Check Zoning and Legal Restrictions This really determines everything; remember the county will control your land use. Ensure that your idea will comply with local zoning laws and regulations. You might need permits or have to adhere to specific guidelines depending on the intended use of the land. Commercial zoning in the city would be marketed as business space lease. Agricultural would be for farming use and recreational for more fun type use. Residential is more difficult to lease; however, most residential zoning has other uses as well.


3. Prepare the Land Depending on the intended use, you may need to prepare or improve the land before marketing it. This could include clearing, fencing, adding road access, installing utilities, or building structures like barns or sheds. For billboard land, you can even make a visual and get the demographics of the daily traffic. Cell tower use, while rare, may find your land would improve a signal in the area. For a paintball park, you could build a mini village to get their idea started. For a winery, if some are nearby, do a soil test and provide climate data. Be creative!


4. Set a Competitive Price


Research rental and lease rates for similar land in your area to set a competitive price. Consider factors like location, size, accessibility, and amenities. You really will have to market this yourself; agents usually won't get involved with the complexities of this. Unless it's million-dollar prime lease property, it's up to you to get this leased out and make passive income.


5. Create a Lease Agreement


Draft a legal lease agreement that outlines the terms and conditions of the lease. If you don't do this, you could end up with a squatter; never do a handshake agreement with this. This should include the lease period, payment terms, responsibilities of each party, and any restrictions on land use. You should get a lawyer involved in this process.


6. Advertise the Property


List your land on rental platforms, local classifieds, agriculture or outdoor recreation forums, and social media. Networking with local businesses and communities can also be effective. If a winery is next to your land, go visit them and offer them an expansion. A lot of landowners in Sonoma Valley do this, not only do they get great income but they get free wine! If you have a good lot near a major highway, contact a billboard rental company. For agriculture, provide a soil test and send a mailer to local farmers. For RV storage, hunting, paintball courses, and all that, build out the idea for them. Advertise 'Business Opportunity!'


7. Screen Potential Renters


Conduct interviews or background checks to ensure potential renters are reliable and have a clear plan for the land's use. References from previous landlords or business partners can be valuable. With today's renter laws, it's so important to do credit checks and more to make sure you get paid. Make sure they are serious about their idea; do they have funding? If you have to go through an eviction, you will regret it; the idea will cost you more money than you make.


8. Manage the Property


Once you have a leaser, you'll need to manage the property. This could include regular check-ins, maintenance, and ensuring that the terms of the lease are being followed. You're better off with raw land, of course; you wouldn't own the business or buildings on it. Super easy hands-off cash if you do it right.


9. Consider Insurance


Make sure you have appropriate insurance coverage. This could include liability insurance, especially if the land will be used for public events or activities that might carry risks. While it seems unfair, crazy things like someone tripping on an exposed pipe would cost you if they decided to sue. Insurance protects you in most cases; you shouldn't go without it.


10. Establish Clear Communication


Maintain open and clear communication with your renters. Address issues promptly and be available for any questions or concerns they might have. This will protect you over time; if the person leasing your land tells you about a concern and you do nothing, this could cause legal issues.


Remember, each type of land rental comes with its own set of considerations and challenges. But imagine keeping your land without selling, yet still making passive income on it under a lease; it's a dream come true!"

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