Is there a foolproof method of buying land that is historically guaranteed to increase assets? Yes, there is! The secret is buying rural land in the United States at a low “per-acre” price and holding it long enough.
Consider the Louisiana Purchase in 1803 of 530 million acres for three cents per acre, the Alaska Purchase in 1867 of 375 million acres for two cents per acre, or the vast railroad holdings and large ranches assembled in the late 1800s and early 1900s for prices ranging from 10 cents to $10 per acre.
Even as late as 1993, the lowest-priced acreage to be found in the United States (located in several Western states) was around $15 per acre, and by March of 2009, those same properties are around $250 per acre. The price rose to 16 times the original purchase price in just 16 years!
As a comparison, note that the Dow Jones in 1993 was 3,500 and today (March of 2009) is around 7,000, representing a price increase of barely two times. Does anyone really believe that the low per-acre prices of today won’t be a tremendous bargain compared to the prices 20 years from now?
Big-name banks and financial institutions have collapsed, trillions of dollars in stock market value has evaporated, billions of dollars in home values have been lost to foreclosures, and Treasury bills are paying dismal returns. Are there any dependable assets still available? Perhaps low-priced rural acreage located in the “boondocks” of rural America might offer some interesting possibilities.
Please consider the following facts pertaining to low-priced rural land.
1) Unlike many assets, low-priced land – if purchased cheaply enough and held long enough – has historically proven to be one asset on which it is virtually impossible to lose money.
2) Projections are that by 2050, the population of the United States will increase by 100 million people, yet not one acre of new land will be created.
3) Inflation alone can beneficially impact the value of low-priced land. Remember how much postage stamps, automobiles, food, shelter and a gallon of gasoline have increased over the last few decades?
4) Land can’t be manufactured, stolen, destroyed, burned down, or mismanaged and always remains.
5) Unlike common stocks raw land never “goes out of business” and can’t be outdated by new technology. Many excellent stocks of 50 years ago simply don’t exist today yet every acre of land that existed 50 years ago is still here and is worth more today than it was then.
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