WHY INVESTING IN LAND IS ALMOST ALWAYS PROFITABLE IN THE LONG RUN

Most people think that land investment is only for real estate developers who buy big parcels of land for commercial or residential development. But actually, investing in land is one of the greatest investment strategies available for everybody who wants to build wealth!

SCARCITY!

As the supply shrinks and the demand increases, the value goes up. The supply and demand equation is the essence of our free market economy.

Every year hundreds of thousands of immigrants enter this beautiful country. Most of them are highly educated professionals with financial resources and the mind-set to start pursuing their American Dream by investing in Land and/or other Real Estate… Add on the Baby Boomers, Unprecedented Rate of Birth and Longer Life Span to immigration, you will see why finding undeveloped Land close to major urban areas soon to be a thing of the past.

As you may know, baby boomers make up an incredibly large 30% of our population–all moving towards retirement age over the next 15 years. About half of these people have no intention of staying in their current locale when they retire. Many want to live in places with good “lifestyles”, warm and dry climates that are more arthritis friendly than the rainy and cold plains of the North. A large percentage of these fairly wealthy retirees are heading for Arizona.

According to many pundits’ predictions, “The southwest will be the center of a real estate boom of monumental proportions”. Searching for a warmer climate and a simpler way of life during retirement are the primary motivations for relocation. With close to 75% of potential retirees expressing an interest in moving to a warmer climate for the retirement days, more than 50 million people will be moving below the 35th parallel. Just think about it!

This marks a new and unprecedented era, as it is the first time in history we have ever seen this kind of significant shift in real estate buying patterns. As we are currently in the very early stages of this major demographic shift, the smart investors are taking advantage of this knowledge by buying Undeveloped Land Now in order to cash-in in a few years time.

Moreover, the population of earth has increased by over 300% to 6.6 Billion People. The population of The United States has also increased very rapidly to over 304,000,000. And all these people compete for land to grow their food, build their amenities and most importantly their homes on their land.

Another important factor is the evolution of media. The Internet has virtually eliminated the necessity of our physical presence to conduct business, etc. Nowadays, one can be an audience to a social performance without being physically present; one can communicate “directly” with others without meeting them in the same place. The walls of our homes no longer isolate us from the invasive means of communications, courtesy of our interwoven “Global Village.” Simply, the Media, Telephone, Television, Fax and Internet have broken the spatial boundaries of the yesteryears and reshaped how we live our lives or conduct our business. Electronic media is present in nearly all physical settings in our country. Almost all American homes have access to Telephone, Television and Internet.

Over 70% of Land Buyers now conduct their due diligence through the Internet prior to buying. They see the property from satellite images… in some ways; the electronic media have homogenized our social structure and linked us all together regardless of our race, gender or status in life.

We at Recker Realty have experienced this evolution first hand; we have helped our international and out of state clients buy and sell hundreds of parcels of land right here in Arizona.

As you can see, we can conduct our business from our homes far from the crowded urban jungles, thanks to the prevalence of the Internet. As a result of which large parcels of land in rural areas are becoming more expensive and hard to find. Today’s expansion of public roads and technology actually bring us back more into nature…

ANOTHER REASON FOR INVESTING IN LAND IS THE POWER TO LEVERAGE

 By Leverage I mean your ability to buy Land today and pay for it over time. With this option, you achieve two objectives: 1) saving a portion of your earned income to control yourself 2) your invested dollar appreciates every day and earns you more money over time. Plus, there are many land sellers who offer an owner financing option. When was the last time a Corporation or a Stock Brokerage Firm would let you buy stock today and pay over 5, 10 or 15 years? (This is a Clue in itself!) 

Just imagine asking your bank for a loan to buy stock. They will probably laugh at you all the way to their vaults. Why is that? That is because the stock market is too risky and unpredictable.

Investing in LAND is also believed to be the best hedge fund against inflation.

If experience is the mother of all knowledge, then I must say: Invest in Land if you want to get Rich or buy stocks if you want others to get Rich!

“Ninety percent of all millionaires become so through owning real estate.”

-Andrew Carnegie

WHEN IS THE BEST TIME TO BUY LAND?

President Abraham Lincoln said it beautifully: “Things may come to those who wait, but only the things left over by those who hustle.”

Historically, land continuously increases in value. Sure there are ups and downs throughout the years, but the overall trend is always up!

So don’t believe all the hype you hear. That the “bubble” is bursting; or that you missed the boat. Or wait and see what happens with the housing market. First of all I am not talking about the housing market. I never buy houses, unless I want to live in them; investing in a house brings a lot of responsibilities and maintenance payments with it. Plus the return on investment on a house is very limited, unless the market is all hyped up, like in the past several years. Do you know someone who bought a house and sold it for 6 times, what he/she paid for it a few months later? Well, I am not talking about gossip here; this is fact! There are many examples in LAND investment that I can give you. I personally bought several parcels online and sold them online (I never even met the person I bought them from or sold them to) and made almost 6 times what I paid only a few months later…The people who bought them from me, apparently, made even more profit than I did… That is because Land has a lot of potential for growth; while, a house is normally bought and sold within the margins of its market value.

Moreover, you can enhance the value of your undeveloped land, sometimes by 1000%. How? You can buy a large parcel within a growing area, subdivide it to smaller pieces (it’s also called paper divide) and sell them for a lot more, individually.

Land is unique. No two pieces of land are entirely the same. As a result, if your property is located in an area that a developer is going to build a major structure, you could be laughing all way to the bank. I have seen this, on many occasions, that developers pay a premium price for a small piece of land to add to their project… the list goes on and on…

So, waiting for the right time to buy land, I believe, is not a good strategy. All you have to do is find the right property at a great price! In other word, smart buyers make their money when they buy their land; by buying low…

TAX INCENTIVES

Did you know investment in Real Estate has major tax incentives? All you have to do is ask your accountant or a Tax Expert. Some of these incentives, exclusive to Real Estate, are: Primary residence Tax Exemption, 1031 Exchange, etc… In fact, I don’t know of any other investment that gives you so many tax incentives.

Indeed there is a lot of truth to the following proverb:

“Land is the Closest Thing to the Proverbial Pot of Gold.”

A wise person once said– “Find out where people go; get there first and buy land; for land is the essence of all wealth!”