Landowning has practically no risk, which is why landowners in the city can sit on a vacant site for years without selling/renting. It is one of the few investments where you get an almost guaranteed return due to population growth and infrastructure.
I can't really say I have any experience in owning land in the city. I was never interested; the taxes are typically very high, the regulations and requirements rather stringent (read expen$ive) and you're subject to frequent changes by city council or bureaucrats with the co$ts associated with same.
But I have studied real estate, owned real estate, and had friends who were landlords. To say there is no risk in land ownership is false. If you're getting $0 income from a property but still paying taxes and compliance costs, let alone mortgage payments, you're in a
negative cash flow situation. Every owner has a limit to how much negative cash flow they can withstand before they become desperate to get rid of the property, even if it means letting the government take it for back taxes.
Maybe things are different in Jersey and Chicago, land o' corruption, but I wouldn't know I stay away from them.
Land values fluctuate. While it is true that,
over the long term property values tend to rise, there can be short-to-medium term drops in local property values that can put a real bind on owners in the area.
If a neighborhood goes into decline (crime, poverty, etc) and property values fall, this can be a problem. If you own 50 units (@ 1440/mo rent ech) in Fallen On Hard Times Ville, and your mortgage plus expenses plus taxes are $60,000 a month on them; but people are leaving the area in droves, your occupancy is way down and you've had to offer deep discounts to get/keep ANY renters... let's say you're only renting 70% of units and at a 20% discount, you've got $40,320 income and you're losing 19,680 a month... most owners who aren't huge national-scale corporations can't sustain that level of loss indefinitely.
Unless you're a giant corporation with lots of pull in City Hall, you can't make the police put in extra effort to clean the neighborhood up; you can't make the people living in FOHTVille stop dealing meth and shooting at each other; and you can't afford to drop a couple million in improvements to attract more/better renters if things might continue to slide downhill.
You'd have to be able to afford to suffer that big monthly loss for a very long time before the "land always rises" principle paid off, and many landlords could not afford to.
Now obviously smart investors try to choose wisely and avoid such situations, but things like that can and do happen.
