Land – as an asset
Investment in real property is a conscious venture investors need to make. Land is real estate or property, minus buildings and equipment that does not occur in a natural way. Land ownership may offer the title holder the right to natural resources on the land.
The term land can be looked at in a number of ways, and its definition viewed differently depending on the nature under which it is analyzed. The basic concept of land is it is a piece of earth, namely a piece of property that has an owner. Land is inclusive of all physical elements, bestowed by nature, to a specific area or piece of property. This includes environment, fields, forests, minerals, climate, animals and bodies or sources of water. In terms of being an asset, land includes anything that is on the ground, which means buildings; trees and water are a part of land as an asset. This is the reason banks, property consultants, investors, financial experts and financial institutions are extremely attracted to land because it is one of the oldest form of security and because it cannot be moved, stolen, wasted or destroyed. Air and space rights are also covered by the term.
Land, as a resource
There is a wealth of natural resources that may be present on a property or piece of land that the owner, or title holder, may be entitled to. This includes plants, human and animal life, soil, minerals, geographical location, electromagnetic features and geophysical occurrences. Whenever any resource or reserve is traceable to a land, it is of great value. Drilling and oil companies, in many instances, pay landowners substantial sums of money for the privilege of using an owner’s land to access such natural resources, as well as shell out small fortunes for large acreages of access, specifically if the land is rich in a specific resource.
Land, as security
When applying for mortgages or any other loan, most lenders ask borrowers to list personal property values on a financial statement. This overview gives prospective creditors a proper measure of personal net worth and how firmly a credit applicant is positioned to repay debt. Individuals seeking the extension of credit are asked to assess the fair market value of personal property. Fair market value reflects the price a reasonable buyer is willing to pay for a particular item.
Some personal property assets, such as furniture, clothing, and automobiles, tend to depreciate. Other movable assets, such as collectibles and antiques, often appreciate in value. When assessing creditworthiness, lenders consider the total value of personal property added to real property and financial assets. The total assets are weighed against what an applicant owes to determine risk assumed by the lender in extending credit.
Of all the properties of available, special recourse is made to real property and a high premium is placed on it depicting its immense value. The extent of value accrued to a land or real property is largely determined amongst others by whether the land has been registered or title of its owner has been perfected or not.