Is land a good deal?

[Kevin Reid]

I am thinking about getting into investing, on a small scale. I'm trying to decide between buying existing properties (which I'll make another post on) or on buying land.

So as far as buying lots of land is concerned I am looking for some opinions. I have a location were the land is still relatively cheap for residential 1/4 acre lots. This is a seaside city in Florida that was hit hard by the recession, but is showing signs of life again. The areas to the north and south are getting pretty built up and soon, maybe 5-15 years this area should be a hotspot for growth.

If I buy and hold for the future it will only cost me a few hundred dollars a year for taxes, and I won't have to maintain anything. So I have about $5k or more to work with this summer and I'm trying to figure out if this is the direction I want to go. I can buy lots for cash for 4-7k and own them outright. Or I can buy a lot on the water and finance it for 35k+. The lots on the water that have homes already build are going for $300k up to 500k.

So would you rather have an inland lot owned outright, or a water lot that you mortgaged?