Invest 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 Cheap land can’t be stolen, destroyed by fire, outdated by technology or reproduced.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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This entry was posted on Sunday, February 21st, 2010 at 9:35 am and is filed under Locations. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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