One of the secrets to investing in cheap raw land is to ignore the old real estate axiom of “location, location and location,” and instead focus on “price, price and price.” There are countless examples of people buying the best located land, yet losing money due to bad timing, zoning issues, economical downturns or political obstructions. On the other hand, history has proven that it’s virtually impossible to lose money owning large tracts of cheap raw land, if purchased cheaply enough and held long enough.
Cheap raw land is a safe and profitable asset to own over a long period of time. It is safe because it can be stolen, can’t be outdated by technology, can’t be destroyed, and most important of all, no new land can be made. In other words, it is a finite asset in a nation with an ever-increasing population and an ever-increasing supply of new paper money
Cheap raw land is profitable to own, as evidenced in a comparison with the stock market. In 1935 the Dow Jones was just under 150, and today it is around 11,000, or 74 times higher than it was in 1935. In 1935 cheap raw land was plentiful in the Western states for prices around $2.50 per acre. Today it is difficult to find cheap raw land for sale anywhere in the United States for under $275 per acre, or 110 times higher than it was in 1935.
How did the value of cash money hold up compared to cheap raw land, over the same period of time? According to the Bureau of Labor Statistics, it would take $16,000 in 2010 to pay for the same goods and services that $1,000 purchased in 1935. Thus, inflation robbed the dollar of 94% of its buying power since 1935. This compares to cheap raw land today being worth 110 times more than it was in 1935.
There are various business ventures – hedge fund activities, currency trading, stock options, commodity speculations, etc – where large sums of fast money can be made. But these activities require specialized knowledge and substantial sums of capital, and even then millions of dollars can be lost overnight. There are no guarantees of success in these ventures.
On the other hand, there is a 100% guarantee that cheap raw land will still be here in the future, and will be worth more money than it is today!
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