Archive for February, 2014

What are Cheap Land Investments?

The definition of cheap land investments would be tracts of rural acreage purchased for a few hundred dollars per-acre. Such properties would be located in the “middle of nowhere” in several of the large Western states: Wyoming, Texas or South Dakota. Cheap land investments are often overlooked but can be very exciting and financially rewarding.

Other than their homes, the most common assets held by Americans today are bank accounts and stocks. First, let’s discuss the safety factor – how safe is cash in banks and how safe are stocks? For the most part cash in banks is very safe as these deposits are insured by the federal government. Regarding stocks, they can go up, go down and go bust, wiping out stockholders. Simply consider the fate of General Motors, one of the most popular stocks of all time.

Next, let’s review the investment performance of both cash and stocks over the last quarter of a century, or 25 years. According to the U. S. Bureau of Labor Statistics it takes $2,028 in 2010 to purchase the same goods and services that $1,000 purchased a quarter of a century earlier in 1985. Thus over the last 25 years inflation has robbed the dollar of approximately 50% of its purchasing power. In 1985 the Dow Jones first broke the 1,500 barrier and today it is around 10,000, or 7 times higher than in 1985.

How safe are cheap land investments and what has been the historical performance for this type of asset? Cheap land investments are very safe because raw land can’t be stolen, can’t be outdated by technology, can’t be mismanaged, can’t be destroyed by fire and most important of all no more land can be made. Land is a finite commodity and among all assets is the only one certain to still be here in future years. In 1985 the cheapest land for sale in the United States was in the $10 per acre range and today, 25 years later, the cheapest land listed for sale is $178 per acre, or 17 times higher than in 1985.

There are various investments that can make substantial sums of money in a fast period of time such as large scale stock operations, commodity speculations, oil and gas wildcatting, sophisticated hedge fund activities and foreign currency trading. All of these, however, require huge sums of money and specialized knowledge and even then catastrophic losses can occur. In these financial ventures the human factor is involved and there are no guarantees of success or assurances that the asset will even exist in the future.

On the other hand there is a 100% guarantee that land will still be here in the future, and history has proven that it is lvirtually impossible to lose money owning cheap land if purchased cheap enough and held long enough!

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Benefits of Investing in Cheap Land!

The opportunity to invest in cheap land in America should be thoroughly and seriously explored. Cheap land is a very safe asset, and one that is certain to increase in value in future years. Cheap land can’t be stolen, destroyed by fire, outdated by technology or reproduced. All that is required for cheap land to increase in value is inflation and a greater population, both of which are inevitable. Following are just two historical examples to consider.

In the years between 1901 and 1907, the California Development Corporation attempted to build a water canal from the Colorado River westward into California’s Imperial Valley. The goal was to provide a source of irrigation and turn this dry, desolate and uninhabitable area into a subdivision of lush farms. Initially started by private promoters, the project was eventually taken over by the Southern Pacific Railroad with federal support promised by President Teddy Roosevelt. The United States Government owned most of the region, and was offering land for sale at $1.25 per acre. The project failed after thousands of acres were sold and millions of dollars lost, and in 1909, the California Development Corporation was liquidated.

So over the last 100 years, what has happened to land prices in the Imperial Valley? Much of the land is still without water, still desolate and uninhabitable, yet it is very difficult today to find land in the Imperial Valley for less than $1,000 per acre.

For a more recent example of people who decided to invest in cheap land, consider the corridor along Interstate Highway 80 in Wyoming, between the towns of Rock Springs and Rawlins. Local residents refer to the region as “barren and worthless.” Most of the cheap land in this part of the state is in the checkerboard area (ownership of alternate sections divided between the federal government and private owners), which eliminates development potential. Known as the Red Desert, the area has no power, water, utilities or maintained roads.

In 1990, land in the Red Desert could be purchased for as little as $15 per acre. Today, 20 years later, ownership is still divided between the federal government and private parties, the area still no power, water, utilities or maintained roads, and the zoning is unchanged. Yet this same “barren and worthless” land now sells for as much as $500 per acre.

For those who invest in cheap land, it is the per-acre price that is important, not the per-parcel price. For example, a 160-acre tract for $31,840 is far cheaper that a one-acre lot for $4,000. Why? Because the 160-acre tract is priced at only $199 per acre, and the one-acre lot is priced at $4,000 per acre. Ever since the Pilgrims landed in 1620 and Americans began migrating west, people have made fortunes buying land by the acre and selling lots by the parcel!

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The Best Way to Invest in Land?

How does a person invest in land? There are quite a few approaches available. One approach would be to hire an expensive real estate land planning and research firm for the purpose of trying to identify properties that can be rezoned and developed. Another method might be to find a tract of land 10 or 15 miles from a city and hope that the path of growth will be in that direction. Still another way would be to have a knowledgeable real estate broker notify you of good deals when they become available.

Unfortunately, the above methods can be quite complex and usually will be subject to conditions beyond your control—such as the state of the economy, the politics of rezoning, the direction of growth, availability of capital for development, and so on.

Isn’t there an easier, surer method? Yes, there is—a method so easy that even the most sophisticated real estate investors (in fact, especially the most sophisticated) fail to recognize it.

This method involves simply purchasing some of the cheapest per-acre priced land available for sale anywhere in the United States—and then forgetting about it for the next decade or two. While this might appear quite boring, in the end it would be almost impossible not to achieve a substantial profit. And isn’t that what the goal is?

A lot of self-anointed “experts” try to sell books and study courses on how to invest in land, yet most of these folks don’t have a clue themselves. If they did, wouldn’t it make more sense for them to follow their own advice and make a lot of money just doing it, instead of trying to sell you a book?

To view opportunities to invest in land, please click here.

Cheap Acreage for Sale Today!

The safest and surest method of investing in land is to simply purchase a tract of cheap acreage for sale, buy it as cheap as possible, and hang on to it for as long as possible. History has proven that it’s literally impossible to lose money with this type of an investment. This approach is all about price and price alone, because the purchase price is the only thing that can guarantee a profit in the future.

There are countless examples of someone acquiring a tract of land with a prime location in a major city, yet ending up losing their entire investment. Why? For a multitude of reasons, including paying too high a price; being unable to secure necessary rezoning; failing to receive adequate financing for development; and the economy crashing at an inopportune time. So obviously, a well-located tract of land is not the primary ingredient for a successful land investment.

Rather, the prime ingredient for a successful land investment is simply a low enough price. As opposed to a prime property located in a major city, consider a tract of acreage miles from nowhere situated in the middle of the “boondocks.” Land like this won’t be ready for development in a hundred years (if then); it won’t have any utilities, municipal water, or maintained roads. However, if this acreage is purchased cheaply enough and held long enough, then a future profit is almost guaranteed!

The proof of this is the historic fact that all cheap acreage for sale 50 years ago will sell today for a considerably higher price that it did back then. Obviously this statement can’t be made regarding the stock market, as countless public companies that existed 50 years ago went out of business and no longer exist. Yet every single acre of land that existed 50 years ago still exists

To view cheap acreage for sale, please click here.

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Where can you Find Land Dirt-Cheap?

Recently, nervous investors have been jumping off the stock market rollercoaster and fleeing the deflating housing market. So the question is, where can a person invest now and be sure the value of the investment will increase, without the loss risks associated with other investments?

The answer lies in buying land dirt-cheap. Land in the “middle of nowhere” that’s barren and undeveloped. So how can the value of land purchased dirt-cheap increase?

Consider this example: In 1963, Robert P. McCullough, a Los Angeles real estate promoter, purchased 3,500 acres in an isolated area of the Arizona desert and began building Lake Havasu City. Initially, building lots were offered for sale at prices as low as $4,995 each. The city was programmed to attract 75,000 people by 1980. People ridiculed Mr. McCullough and called him a daydreamer.  When there was no stampede of people wanting to settle there, Mr. McCullough decided he needed a promotional gimmick. He purchased the London Bridge, and at a cost of $8 million, he had it shipped from England to Lake Havasu City.

Today, Mr. McCullough has been dead for many years, but Lake Havasu City, and the surrounding Mohave County, are booming and no longer in need of promotional gimmicks. The population of the county is 198,000, there is a community college, and lots can sell for as much as $200,000 and homes as much as $750,000 – all located on what once was land dirt-cheap.

Here’s a different example: Most of the far-western counties of Hudspeth, Culberson, Loving, Reeves, Jeff Davis and Presidio, in the State of Texas, are considered to be barren and worthless. This region is sparsely populated, and the infrastructure of utilities, power, water and roads is very limited. In 1990, you could purchase land dirt-cheap there for as little as $15 per acre. Today, the region is still sparsely populated and the infrastructure is still very limited. But now, this “barren and worthless” land sells for as much as $500 per acre.

What makes the price of land dirt-cheap rise? The answer is “time.” Over time, prices inevitably rise. If an investor can purchase land dirt-cheap and hold it long enough, the price could increase substantially. Land dirt-cheap is inexpensive to acquire and exciting to own, because no one can predict with certainty how that land may be used in the future or how much the value may increase.

In the last 100 years, many investments have disappeared, and their investors have been wiped-out. But every acre of land dirt-cheap that was purchased 100 years ago still exists and is valued at a higher price.
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Foreclosed Land for Sale in the United States

It is not unusual in today’s economic times for a person who previously purchased land to lose the land in default proceedings for failure to keep the payments current. When a lender repossesses the land and offers it for sale again, it becomes foreclosed land for sale. Often, the buyer receives an exceptional bargain because the previous owner already has paid in a considerable equity.

In other words, “One man’s loss becomes another man’s gain!”

A landowner might default and lose ownership for many reasons having nothing to do with the property. The owner might have lost his job; maybe there was an illness in the family; perhaps there was a divorce, or even a death. For these reasons, and perhaps others, ownership of the land was lost, yet the land itself represents an excellent value with great future potential. In other words, the owner’s financial situation “went bad,” but the land is still good.

On the other hand, there are situations involving foreclosures where the owner’s financial situation is still good, but the value of the land “went bad.” These scenarios involve developed land that is no longer economical to develop, and the costs make it too excessive to hold.

An ancient book entitled “The Art of War” contains a clause that states, “A good general ponders the dangers inherent in the advantages, and the advantages inherent in the dangers.” Astute real estate investors should analyze both dangers and advantages inherent in the foreclosure business in much the same manner.

The ideal type of foreclosed land for sale—large tracts of cheap rural acreage—presents an exceptional opportunity that should be thoroughly investigated.

To view properties for sale, CLICK HERE

Cheap Country Land, Where to Find it!

The Civil War ended in 1865, and soon thereafter, the great westward expansion began. Thousands of people headed west seeking cheap country land to settle and the chance to start new lives. These people planned on farming, grazing cattle, harvesting timber, mining for gold and silver, building railroads, starting businesses and constructing towns—all of which required large tracts of low-priced land.

During this migration westward, into an untamed and unforgiving wilderness, a code of conduct began to emerge. The code dictated that a person should “carry a firearm for protection, offer assistance when needed, mind his own business, and acquire cheap country land.”

The Homestead Act of 1862 made it relatively easy to acquire land in the Western United States. A person who was 21 years of age or older and had never taken up arms against the U. S. government could claim 160 acres, located west of the Mississippi River, from the federal government for $1.25 per acre. The claimant had to improve the land and live on it for five years. The $200 purchase price could be paid with a small down payment and the balance could be paid over time.

More desirable land, priced from $2 to $10 per acre, also could be acquired from railroads, land speculators or the states.

The Timber Culture Act, passed in 1873, made additional land available. Under this act, homesteaders could acquire another 160 acres if they planted trees on one-fourth of the land. Any potential settler, including foreign immigrants, could claim land under this act.

The Desert Land Act of 1877 provided 640 acres to a husband and wife who agreed to irrigate the land within three years. The cost of the 640 acres was $1.25 per acre.

In 1878, when the Timber and Stone Act passed, even more land became available. This act provided that federal lands “not suitable” for farming, could be acquired for timber and mining operations. The cost was $2.50 per acre for 160-acre tracts.

In summary, during the last half of the 19th Century, millions and millions of acres of cheap country land were transferred from the federal government to private ownership.

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Advantages to Buying, Selling and Investing in Large Acreage

Buying, selling and investing in large acreage can be very exciting and rewarding. There are three inherent advantages to owning large tracts of land, as opposed to smaller lots.

  • First, there is almost an unlimited supply of small lots available for purchase, whilelarge tracts of land are a much rarer commodity.
  • Second, it is very difficult to subdivide a small lot, while large tracts usually can be parceled into smaller parcels, automatically increasing the per-acre price.
  • Third, in order for a small lot to increase in value, there has to be greater demand for usage, while large acreagecan increase in value simply as the result of ongoing and inevitable inflation.

In the year 1930, the Dow Jones was 294, and a person could have purchased large tracts of land all over the Western United States for $2 per acre. Today, the Dow Jones is approximately 11,000, representing a value 37 times higher than it was 80 years ago. Yet it would be very difficult today to find land for sale anywhere in the United States for less than $200 per acre, representing a value 100 times higher than it was 80 years ago.

There is another important factor at work here that should not be overlooked. The Dow Jones is a group of companies, but in 1930 there were many individual firms that failed, went bankrupt, or were liquidated and no longer exist. However, every single acre of land that existed in the United States of America in 1930 is still here today and is worth considerably more money.

In order for stocks to increase in value, there has to be ongoing positive performance and greater earnings. Large acreage, however, will gain value simply as the result of inflation and population increase, both of which are inevitable in future years.

According to the U. S. Bureau of Labor Statistics, it took $6,536 in 2010 to purchase the same goods and services that $500 purchased in 1930. That means inflation caused the dollar to lose 92% of its purchasing power over the last 80 years. The population of the United States in 1930 was 127 million people; today it is 317 million and is projected to exceed 400 million by 2040.

In the future, if inflation continues as it has since the founding of the nation; if the population continues to increase as it has since the founding of the nation; and if no one figures out how to make more land –then the only conclusion is that the finite supply of large acreage has to increase in value in future years!

To view properties for sale, CLICK HERE