Ed Neuhaus 
Raw land has averaged 5-10% annual appreciation nationally over the last decade, and in Texas the Austin-Waco-Hill Country corridor just hit a record $7,704 per acre. That is not a typo. And the best part? You can get started in raw land investing for a fraction of what a rental property costs, with zero tenants calling you about a leaky faucet at 2am.
Sounds too good to be true right. But here’s the thing, it’s not. It’s just different. Land doesn’t cash flow like a rental (well, usually), it doesn’t depreciate on your tax return the same way, and it can be painfully illiquid if you buy wrong. But when you buy right, raw land is one of the most overlooked wealth builders in real estate.
According to Texas Farm Credit’s 2026 land pricing data, Texas cropland averaged $2,710 per acre (up 5.4% year over year) and pastureland hit $2,300 per acre (up 4.5%). Development-stage vacant land is averaging about $10,200 per acre statewide. Those numbers matter because they tell you something important: land values are climbing even when the housing market feels uncertain.
I’ve been working the Austin real estate market for 19 years, and I’ve personally been involved in land deals that took patience most people don’t have. My family spent decades assembling 960 scattered lots in Houston (some with 10-15 owners on a single 2,500 sqft parcel), paying about $10,000 per lot for parcels that were individually worthless. No roads, no utilities. Nobody else could see the value. That property is now a massive industrial warehouse complex. Mark Podolsky wrote an entire book about this called “Dirt Rich,” and his whole thesis is that land is the most boring, profitable, overlooked asset class in real estate. He’s not wrong.
So lets walk through the complete playbook for raw land investing, from finding deals to exit strategies that actually work.
Why Raw Land Deserves a Spot in Your Portfolio
Most investors skip right past vacant land because it doesn’t produce monthly income. And I get that instinct. But here’s what they’re missing.
The entry cost is dramatically lower. You can buy rural acreage in Texas for $2,000 to $5,000 per acre depending on the county. Compare that to a median home price of $450,000+ in the Austin metro. You’re not taking out a $400,000 mortgage and crossing your fingers that the tenant pays rent. You might be writing a $15,000 check for 5 acres and sitting on it.
Zero management headaches. No tenants, no toilets, no 3am phone calls. The land just sits there. Maybe you mow it once a year or pay the county $200 in property taxes. That’s it. Benjamin Graham (the guy Warren Buffett calls his mentor) wrote in The Intelligent Investor that the best investments are the ones you can hold without losing sleep. Raw land fits that description better than almost anything else in real estate.
The holding costs are almost nothing. Property taxes on undeveloped land are a fraction of what you’d pay on improved property, especially if you qualify for agricultural exemption in Texas. Insurance? Optional in most cases. Maintenance? What maintenance.
And appreciation can be significant. When a small town grows, when a highway gets extended, when utilities reach a previously unserved area, land values don’t just inch up. They jump. I’ve watched parcels west of Austin in Dripping Springs go from $5,000 an acre to $50,000+ over 15 years as the growth corridor pushed out.
If you want to dig deeper into whether buying land is actually a good investment for your situation, I wrote a companion piece that breaks down the math in more detail.
How to Find Raw Land Deals
Ok so you’re convinced (or at least curious). Where do you actually find land worth buying? This is where most people get stuck because vacant land doesn’t get marketed the same way houses do. There’s no open house, no staged kitchen, no drone photos of the pool.
County tax sales and auctions. This is the deep end of the pool but also where the best deals live. Every county in Texas holds tax lien sales for properties with delinquent taxes. The county treasurer publishes lists of available parcels, usually online and in the local newspaper, at least three weeks before the auction. You show up, you bid, and you can sometimes buy land for pennies on the dollar. Travis County, Hays County, Williamson County all have these. The catch? You’re buying as-is with no warranties, so you better have done your homework.
The MLS (yes, really). Land does get listed on the MLS, it just doesn’t get the same attention as houses. I see parcels sit for months because most buyer agents don’t specialize in land and most buyers aren’t looking for it. That’s an advantage for you. Less competition means more room to negotiate.
Direct mail to landowners. This is old school but it works. Pull a list of vacant land owners from the county appraisal district (you can do this online in most Texas counties through the CAD website). Send them a letter. “Hey, I noticed you own 10 acres on County Road 401. Any interest in selling?” You’d be shocked how many people inherited land they’ve never visited and would love to convert it to cash.
Online land marketplaces. Sites like LandWatch, Lands of America, and Land.com aggregate vacant land listings nationwide. The deals aren’t as good as tax sales or direct mail (the sellers know what they have), but it’s a solid way to scan inventory and understand pricing in a given area.
Driving for dollars. Get in your truck and drive around the areas you’re interested in. Look for overgrown lots, old fence posts with no gate, county road frontage with no development. Write down the addresses, look up the owners on the county appraisal district website, and reach out. Not exactly high tech right. But it works.
For a detailed walkthrough of what to check before you buy any parcel, take a look at the land due diligence checklist I put together. It covers everything from title searches to utility access to environmental assessments.
Financing Raw Land (It’s Not Like Buying a House)
Here’s where raw land investing gets real. Banks are not excited about lending on vacant land. There’s no structure to foreclose on if you default, no rental income to service the debt, and the collateral is basically dirt. So the financing landscape looks different.
Cash is king. If you can buy outright with cash, you skip every financing headache. And because land prices are lower than housing prices, this is actually achievable for a lot of investors. A $20,000 parcel doesn’t require a 30-year mortgage. It requires saving for a year or two.
Seller financing (owner financing). This is probably the most common way people buy raw land, and it’s honestly one of the best. The seller acts as the bank. You negotiate a purchase price, a down payment (often 10-20%), an interest rate (typically 6-10%), and a term (5-15 years). No credit check, no bank approval, no appraisal fee. Monthly payments go directly to the seller. I see this structure on probably half the rural land deals that cross my desk.
Land loans from banks and credit unions. They exist, but the terms are tougher. Most lenders want 25-35% down for raw land (compared to 20% for a house). Interest rates run higher than conventional mortgages. You’ll need a 680+ credit score. And the loan terms are shorter, often 5-15 years instead of 30. Local community banks and credit unions tend to be more flexible than big national lenders here because they understand the local market.
USDA loans. If the land is in a rural area (and a lot of Central Texas qualifies), USDA loans can offer zero down payment and competitive rates. There are income limits though, and the property has to be your primary residence or have an agricultural purpose.
Home equity. If you own a home with equity, you can tap that with a HELOC or home equity loan and use the proceeds to buy land outright. You’re basically borrowing against one asset to acquire another. Just understand you’re putting your home on the line.
Understanding Holding Costs
One thing that catches new land investors off guard is the holding cost calculation. It’s low, but it’s not zero, and over 5-10 years it adds up.
Property taxes. Even vacant land gets taxed. In Texas, unimproved land is assessed at market value by the county appraisal district. The good news is that raw land values are dramatically lower than improved property values, so the tax bill is small. And if you can get an agricultural exemption (ag exempt) by running cattle, growing hay, or even beekeeping (not kidding, this is a real thing in Hays County), your assessed value drops by 90% or more.
Insurance. Most investors don’t insure vacant land because there’s nothing to insure. A liability policy is smart if people could wander onto the property, but it’s cheap. We’re talking maybe $100-200 per year.
Maintenance. Depends on the land. If it’s in a municipality you might need to mow to avoid code violations. If it’s rural, nature handles itself. Budget $200-500 per year for basic upkeep.
Loan payments. If you financed the purchase, your monthly payment is your biggest carrying cost. Run the numbers before you buy. A $50,000 parcel with 30% down at 8% over 10 years is about $425/month. Can you carry that for the long haul without rental income offsetting it?
The total picture. For a typical 10-acre rural parcel in Central Texas, you might be looking at $1,500-3,000 per year in total holding costs (taxes, insurance, maintenance) if you bought cash. That’s $250/month to hold an appreciating asset with no management headaches. Compared to the carrying costs on a rental investment property, it’s nothing.
Five Exit Strategies That Actually Work
This is where raw land investing gets fun. You’ve got more options than most people realize, and your exit strategy should honestly be part of your buying criteria from day one.
1. Buy and hold for appreciation. The tortoise strategy. Buy land in the path of growth and wait. I wrote about this exact philosophy years ago and nothing has changed my mind. Gary Keller’s “Millionaire Real Estate Investor” hammers this point home: time in the market beats timing the market, every single time. If you bought 20 acres west of Austin in 2010 and just sat on it, you probably 4-5x’d your money by now. The key is buying in growth corridors with expanding infrastructure (roads, utilities, schools).
2. Subdivide and sell. Buy a large parcel, plat it into smaller lots, and sell them individually. A 20-acre tract at $5,000/acre ($100,000 total) might subdivide into ten 2-acre lots that sell for $30,000-50,000 each. The math works, but subdividing requires navigating county permitting, surveying costs, and potentially road construction. It’s not passive. But the margins can be exceptional.
3. Develop or entitle, then sell. This is the highest-risk, highest-reward play. Buy raw land, get it rezoned or entitled for a specific use (residential, commercial, mixed-use), and sell the entitled land to a builder or developer at a premium. The entitlement process can take 6-24 months and cost $50,000+ in engineering, legal, and permitting fees. But entitled land sells for dramatically more than unentitled land because you’ve removed the development risk for the next buyer.
4. Lease it. Land generates income? Yes, actually. Agricultural leases (farming, ranching, hunting) can produce $10-50 per acre annually depending on the use. Cell tower leases pay $500-2,500 per month. Solar farm leases are becoming increasingly common in rural Texas. You keep the land, someone pays you to use it, and it still appreciates.
5. Flip it. Buy undervalued land (tax sales, distressed sellers, inherited parcels) and resell quickly for a profit. Land flipping works because the transaction costs are lower than houses (no inspections, no appraisals in many cases, lower closing costs). A parcel you bought at a tax sale for $3,000 might sell for $10,000-15,000 with some basic cleanup and marketing. The margins are smaller in absolute dollars but the ROI percentage can be huge.
If you’re thinking about land specifically in the Texas Hill Country, my guide on how to buy land in the Hill Country covers the local nuances you need to know (floodplains, well water, septic requirements, the works).
The Risks Nobody Talks About
I’d be lying if I told you raw land investing was all upside. It’s not. And I would rather be honest about the risks than have you learn them the hard way.
Illiquidity is the big one. Land can take months or even years to sell. There’s no Zillow “make me move” price for vacant acreage. The buyer pool is smaller, the marketing channels are different, and you can’t stage a field. If you need your capital back quickly, land is not the place to park it.
No income while you hold. Unlike a rental property that pays you every month, land just costs you money until you sell it or lease it. You’re betting on appreciation, and appreciation is not guaranteed. I’m comfortable with that bet in growth markets like Central Texas, but not every market has the same trajectory.
Zoning and regulatory risk. What if the county rezones the area in a way that kills your intended use? What if new environmental regulations restrict development? What if a flood plain designation changes? These things happen, and they can tank the value of your parcel overnight. This is why due diligence is so critical before you buy.
Access and utility issues. Not all land is created equal. A 20-acre parcel with no road access, no water, no electricity, and no sewer is worth dramatically less than one with all of those things. And bringing utilities to raw land can cost $20,000-100,000+ depending on distance. Know what you’re buying.
Environmental concerns. Wetlands, endangered species habitat, contaminated soil, old landfills (trust me, I know this one personally). Environmental issues can make land unbuildable or require expensive remediation. Get a Phase 1 environmental assessment on anything you’re serious about.
Tax Implications Worth Knowing
The tax picture for raw land is different from houses and rental properties, and understanding it can save you real money.
Property tax deduction. You can deduct property taxes paid on investment land. This is an itemized deduction and it’s straightforward.
Interest deduction. If you financed the land purchase, interest is deductible up to your net investment income. Excess carries forward to future years. Track this on Form 4952.
Capital gains treatment. When you sell land held for investment, profits are taxed as capital gains. Hold for more than a year and you get the long-term capital gains rate (0%, 15%, or 20% depending on income). That’s significantly better than ordinary income tax rates.
1031 exchange. Yes, vacant land qualifies for a 1031 exchange as long as it was held for investment purposes. Sell your land, roll the proceeds into another investment property within the IRS timelines, and defer the capital gains tax entirely. This is one of the most powerful tools in the real estate investing playbook and it absolutely applies to land.
Agricultural exemption. In Texas, land used for agricultural purposes can qualify for ag valuation, which dramatically reduces your property tax assessment. You don’t have to be a full-time farmer. A wildlife management plan, a small cattle lease, or yes, beekeeping (I told you) can qualify. The savings can be 80-95% on your property tax bill.
No depreciation. Unlike buildings, land cannot be depreciated on your tax return. This is a real disadvantage compared to rental properties. You miss out on that phantom expense that shelters rental income from taxation. Something to factor into your overall investment strategy.
Frequently Asked Questions
The Bottom Line on Raw Land
Raw land investing is not sexy. It’s not going to make you rich overnight. But if you have patience, if you buy in the right location, and if you understand what you own and why you own it, land can be one of the most reliable wealth builders in your portfolio. Low entry cost, minimal management, real appreciation potential.
I’ve lived this strategy with my own family’s land deals. 960 lots assembled over decades into something nobody else could see. The tortoise wins every time.
If you’re looking at land in the Austin area or the Texas Hill Country, lets talk. I’ve been doing this for 19 years and land deals are honestly some of the most interesting work I do. And if you’re building a broader real estate investment portfolio, land deserves a seat at the table.
Be safe, be good, and be nice to people.
