Archive for the ‘The Rural Acreage Game’ Category

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

Where is the Cheapest Land for Sale?

Buying a large tract of the cheapest land for sale today is one of the simplest, safest and surest methods of achieving greater assets tomorrow.

Let’s review the performance of the cheapest land for sale versus Wall Street, gold and cash, over the last 30 years.

  • From 1981 to the beginning of 2011, the Dow Jones went from 1025 to 11,500. So the Dow Jones is 11 times higher than it was 30 years ago.
  • The price of gold multiplied less than 2 ½ times between 1981 and 2011, from $599 to $1,415.
  • The value of cash decreased dramatically over the last 30 years. According to the U. S. Bureau of Labor Statistics, it takes $2,400 today to purchase the same goods and services that $1,000 purchased 30 years ago.

Now, let’s look at how the value of the cheapest land for sale in the United States has fared over the last 30 years.

  • In 1981, the cheapest land for sale in the United States cost about $10 per acre, and today the cheapest land for sale costs around $180 per acre. The cheapest land for sale today is 18 times higher than it was 30 years ago.

Finally, let’s review the risks associated with other forms of real estate investment.

  • Agricultural land can suffer from a decline in the agricultural business.
  • Apartment buildings can depreciate in value during recessionary times.
  • Commercial properties can become financial sinkholes without paying tenants.
  • Prime developmental land in the middle of a city can sit vacant for years due to zoning difficulties, the lack of bank financing, or a downturn in the economy.

In order to be successful, these investments require intensive management, substantial sums of capital, and advantageous timing – and even then they occasionally fail.

On the other hand, purchasing the cheapest land for sale and doing nothing but holding it for a long period of time is a proven formula for success. Every single acre of the cheapest land for sale that existed 50 years ago is still here today and worth substantially more money.

To view the cheapest land for sale today, CLICK HERE

The Rural Acreage Game

Raw, undeveloped rural acreage always has been one of the most exciting and overlooked segments of the real estate business. This type of property generally increases in value through the years solely as the result of two inevitable causes – an ever-increasing population, together with ever-present inflation. In fact, history proves that it is practically impossible to lose money owning land if bought cheaply enough and held long enough.

Doug Caffey began dealing in rural land in 1967 with the purchase of 160 acres located on the slopes of Mt. Shasta in Northern California. On literally the last day of the 90-day escrow Caffey finally resold 80 acres for enough to pay for the entire 160 acres and immediately began searching for more deals.

In the ensuing years Caffey became one of the largest rural land dealers in the Western United States. He has been involved in the acquisition and marketing of approximately 500,000 acres scattered throughout California, Oregon, Utah, Nevada, Wyoming, South Dakota, West Texas and Oklahoma. His partnerships and companies control millions of dollars worth of land sales contracts and trust deeds, and bank references can be provided.

Caffey’s view of the land business has always been exceedingly simple. While most land investors and dealers take the “subjective” approach (meaning that values are based on the buyer’s perception of future development potential), Caffey’s approach is strictly “objective,” (meaning that a low per-acre price is all that really matters). That is why in 1993, Caffey and his partner quickly purchased the 17,000-acre Blake Sheep Ranch that no one wanted in Sweetwater County, Wyoming — solely because the price was only $13 per acre.

Through the years, this ranch was resold in smaller tracts for prices as high as 25 times the purchase price, resulting in a profit of several million dollars. Yet nothing was done to the land, no development occurred, and the zoning remained the same. Price alone was what attracted Caffey and his partner, and price alone was the primary motivation for subsequent purchasers.

In Caffey’s 40-year career in the rural acreage game he has been involved in various interesting deals with a cast of colorful and notable characters, including the following:

Caffey and another partner purchased 600 acres in Whiskeytown, California and resold it to a legendary Hollywood talent manager and wheeler-dealer.

Caffey purchased the “Ranch of the Stars” in Lassen County, California from Art and Jack Linkletter and resold it.

He optioned the Ochotorena Sheep Ranch near Ravendale in Northern California and resold it to an investment group in the Philippines headed by a prominent attorney who had been on General MacArthur’s staff during World War II.

He purchased a large ranch in Siskiyou County, California from the Parsons family and resold most of it to Hong Kong investors.

In 1973, Caffey traveled to New Jersey and optioned 112,000 acres practically bordering Reno, Nevada from Curtis-Wright Corporation. Among the potential buyers he personally showed the property to was Morris Shenker, Jimmy Hoffa’s mob connected attorney who later owned the Dunes Hotel and Casino in Las Vegas. Even though the land was optioned for the amazingly low price of $25 per acre, and offered for sale at just $69 per acre, a buyer was never found. But today, that same land contains shopping centers, commercial developments and housing subdivisions and is worth many millions of dollars.

There were many other deals involving real and prospective buyers including Cal Worthington (the famous TV car salesman); John DeLorean; several movie stars; the president of World Airways; the vice-president of Harrah’s Hotels and Casinos; Robert L. Vesco (the fugitive financier who was accused of stealing over $200 million in the 1970s); wealthy Japanese investors; and several Wall Street tycoons.

Caffey is eminently familiar with all aspects of the rural land business including purchase negotiations, installment land sales, county and state subdivision regulations, release clauses, substitution of collateral agreements, ingress and egress easements, title policy issues, marketing programs, account servicing and collections, and institutional and private financing. Caffey firmly believes that this particular niche of the real estate business is in the embryonic stage and offers spectacular potential.

If you wish to discuss with Caffey directly any rural land opportunities, thoughts or ideas you might have, email doug@CheapLandinAmerica.com or phone (800) 421-7163.

To view rural acreage investments, CLICK HERE.