Posts Tagged ‘dirt cheap land’

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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Cheap Land for Sale Versus Expensive Rural Property

Let’s compare very cheap land for sale with the opposite end of the spectrum, very expensive land for sale. The latest Land Report Magazine (Winter 2011) listed the 10 most expensive rural properties for sale in the United States.

The 10 most expensive rural properties ranged in size from 1,750 acres to 55,700 acres and were priced from $1,000 per acre to $100,000 per acre. Total sales prices were $44 million to $175 million. The properties were mainly located in Wyoming, Montana, Colorado, New Mexico, and West Texas.

Who or what establishes the sales price of 1,750 acres near Jackson, Wyoming at $100,000 per acre, or $175 million? Basically, the sales price is determined by what one multimillionaire or billionaire agrees to pay another multimillionaire or billionaire. In other words, it is a very tenuous, somewhat illusionary, market. These properties are purchased with discretionary funds that can easily dry up during economical recessions. Paying $100,000 per acre for 1,750 acres with the expectation of a quick profit would be exceedingly risky. The price could just as easily sink to $60,000 per acre, resulting in a capital loss of $70 million.

Very cheap land for sale, properties selling for $300 to $400 per acre, very seldom, if ever, decline much in value, as they are already priced at the very bottom of the scale. Furthermore, there is safety in the number of people who would have the interest and the financial means to purchase $300 to $400 per acre land. Conversely, how many people in America would have the interest and the financial means to write a check and pay $175 million for 1,750 acres of rural land?

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Dirt Cheap Land for Sale in the United States?

When people see dirt-cheap land for sale, the first question they usually ask is, “But can the land be used for anything?” Following are just two historical examples to consider.

The Imperial Valley Venture

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 eventually was 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 dirt cheap 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 what has happened to these dirt-cheap land prices during the last 100 years 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.

Interstate Highway 80 in Wyoming

For a more recent example of dirt-cheap land for sale, consider the area 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 dirt-cheap land for sale 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, this area has no power, water, utilities or maintained roads. In 1990, land could have been 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 has 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.

If a person is seeking land for a specific use —  such as agriculture, hunting, immediate development, or a site for a retirement cabin with utilities, trees and a creek running through the middle – then dirt-cheap land for sale probably won’t fit these needs. However, dirt-cheap land for sale is an overlooked real estate niche, as a large number of people have an almost innate desire to own such properties. Dirt-cheap land for sale is inexpensive to acquire and very exciting to own, because who can predict, with absolute certainty, future usage or values?

A hundred years ago, there were many popular, prominent stocks that no longer exist. These companies went broke, went out of business or were made obsolete by technology. However every single acre of dirt-cheap land for sale 100 years ago is still here today and is valued at a higher price. The predictable thing about dirt-cheap land for sale in the United States is that it will eventually increase in value as the result of nothing but the passage of time.

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