Making Money from Vacant Land

Exploring 13 different "Covered Land" strategies, or how investors monetize dirt

Whether intentionally or not, real estate investors often find themselves holding vacant land. Wealthy families and other generational holders see land as an inflation hedge and reliable long-term bet. In other cases, investors and developers are stuck with vacant land when something goes awry—perhaps a deal no longer pencils or an investor drops out—and the sponsor is stuck owning dirt.

Today’s Thesis Driven will explore various strategies for making money from that dirt, from hunting leases to outdoor storage to glamping. Not all strategies will be a fit for every plot, but we’ll try to cover many of the major monetization approaches for both rural and urban land.

Much thanks to @landlawyerbrian for his help with this letter! You can find him on Twitter/X.

Rural and Exurban Land

Empty land out in the country tends to be monetized in very different ways than land in an urban area. Hunting leases, for instance, are unlikely to draw much interest in an urban center, while metered parking might not be viable on a rural site. So we’ll tackle each type of land separately.

Rural or exurban land is generally easier to monetize at a reasonable return than urban land. While a piece of vacant urban land may draw more interest from potential users, vacancy is likely not its highest and best use, so the returns one can generate relative to the price of land are limited—a temporary tactic to stanch the bleed of holding costs but not a viable investment strategy.

Rural land, on the other hand, may very well be best left unbuilt. Without a clear higher and better use, the right combination of rural land monetization strategies can generate a reasonable unlevered yield (perhaps 3 to 5% on cost) when applied to the right piece of dirt—almost impossible in an urban setting.

Let’s dive in.

Hunting Leases

Often overlooked by urban investors, hunting leases can provide a meaningful source of revenue for rural land with abundant deer, pheasant, duck, turkey, or other game species. While hunting leases are unlikely to produce an attractive yield on cost by themselves—perhaps 1 to 2% of land value per year at best—they are low-lift operationally and can meaningful defray the holding costs of land. According to @LandLawyerBrian, “hunting leases are a good way to help pay your property taxes.”