Are you aware that in the midst of a falling housing market, land in many places is appreciating in value? So why aren’t more investors looking for land as part of their investment strategy? The answer is that most investors focus on the overdeveloped residential and commercial real estate markets and have not considered raw land as a viable option to develop their real estate career.
Land is the place to be in 2008 and 2009
According to the USDA, there are 2.2 billion acres (yes, that’s 1 billion with a big B!) In the United States. Of the total amount of land, 1.6 billion acres can be bought and sold. Some of you are thinking, “So what? Are people really buying land, especially when house prices in many places are falling?” The answer is a resounding yes!
In an article for LandFlip.com, Emily Wilson, a real estate agent in Shelbyville, TN (south of Nashville) was asked to comment on how land in her area is selling. He stated that “acreage is selling better than subdivision houses in our Middle Tennessee area. We sell a lot of horse farms and high-priced properties, and the ones that have … they still want more, but if I depended on the Initial home sales for a living, I’d be crying hard times. Instead, our company’s sales were up $ 1 million compared to the same period last year. “
97% of the United States is designated as rural land.
When most investors think of land, they think of parcels in or near city limits. Most of these properties are zoned as commercial parcels. I do not focus my efforts on this type of property. Rather, I am dedicated to rural or raw land, since 97% of our country is designated as such. Raw land is property that is far from existing development patterns. Also, it has no improvements like utilities, landscaping, drainage, or buildings. It can be as small as a quarter of an acre or as large as thousands of acres. Most likely, the plot is on a dirt or gravel road. If you are going to live in it, you will first have to drill a well for water and install a septic tank on the property.
The demand for raw land is increasing across the country like never before. One group that is buying land in this economy is:
Retirement of the baby boomers
According to a survey commissioned by the National Association of Realtors (NAR), 60% of Boomers want to retire to a rural area or small town. Additionally, one in four Americans born between 1946 and 1964 owns more than one property, according to a survey of nearly 2,000 boomers conducted by Harris Interactive for NAR.
Boomers have “an almost insatiable desire for real estate,” David Lereah, NAR’s chief economist, said in a statement. They see real estate as “a way to build and protect an egg nest.”
Why vacant lots? “For many people, it is a dream to have a second home, but they really can’t afford it,” says Peter Francese, founder of American Demographics magazine, who was asked by NAR to help interpret the survey. , they buy a lot. “
Real estate has become a key component of the Boomers’ retirement plans. The July 2008 issue of Business Week reports that “baby boomers are retiring at the rate of 10,000 every 24 hours … within 2 decades, a record $ 17 trillion will change hands of corporate pension funds and pension funds. 401 (k) retirement plans in the hands of retirees “. This group will continue to drive a portion of its real estate investment portfolio, specifically raw land, fueling demand for land like never before.
For example, a developer bought a large tract of land in western North Carolina and divided it into 1,800 1-6 acre parcels. Lots range in price from $ 40,000 to $ 100,000 (depending on the size of the parcel and its location in the subdivision). In one year they sold 800 packages! The essence of your promotional campaign: buy the lot and grow your money as the property appreciates (as if it were a stock). At some point, the owner will build on the lot or sell it. They also offer an affordable monthly payment program for those who cannot pay in full. There is no “deed restriction” for this community, which means that the buyer is NOT obligated at ANY time to build on the property.
One of the other motivations for this generation to invest in land is that they are nervous about having all their funds in investments related to the stock market. We have certainly seen a lot of volatility in the stock market in recent months. More and more investors are taking a part of their investment portfolio and buying land. Why? The premise is: historically, land has never lost value.
Developers are seeing this trend and changing their strategy. In the past, a developer bought a large tract of land near a city and then subdivided it into lots to build houses. They are now buying land in desirable rural locations across the country, dividing it into smaller parcels and selling it to the Boomers. As previously documented, they are having great success.
Even Wal-Mart is tackling migration to rural areas
FL and AZ are no longer top destinations for retirees. Retirees are looking across the country to purchase rural land on which to retire. The main criteria for your purchase is that the package is within a reasonable driving distance of a Super Wal-Mart and medical care. Wal-Mart has picked up on this trend and is building many of its new stores in rural crossroads in the United States, opening up areas of land that were originally thought to be too far from amenities and supplies.
Why is there a great interest in moving out of the big city?
Boomers are moving to rural areas to experience the beauty, peace and serenity of the country. Unlike previous generations, they retire earlier and want to live where they can walk, bike, garden, start a horse farm, or just commune with nature. Ultimately, it’s about leaving the suburbs and its complications. It is a dream for a new beginning in the “second half” of your life.
I recently spoke with a 50-year-old investor from New York City. He has lived most of his life in an apartment. You commute more than an hour to and from your office. He loves gardening, but has never had a backyard to enjoy this hobby in his entire adult life. You are beginning to think about your retirement years. Her dream is to buy a parcel of land in rural GA so she can fulfill her longing for a garden and a more relaxed lifestyle. He is working hard to make that dream come true. This is an example of why those approaching retirement see the earth as part of their future.
Boomers are buying raw earth of all shapes and sizes
What kind of land are boomers buying? Remember that this is about the destination: living in a rural setting. Most imagine living on a small plot of land (20 acres or less). They don’t want a large tract of land as their focus is living near a small town (near a Super Wal-Mart and medical care).
Ryan Folk, editor of LandFlip.com keeps up with recent land sales. According to Mr. Folk, what is being sold? He says, “Small residential / retirement areas less than 20 acres … [and] very large, beautiful farms, ranches and plantations. “
Not only are small parcels of land sold, but there is also a growing segment of Baby Boomers who are buying hundreds and sometimes thousands of acres. Many boomers have the financial means to buy large tracts of land.
I was recently at a wedding and sat next to a retiring army colonel. When you heard that I educate investors on the dynamics of the earth, did you ever feel dizzy? He had a dream of leaving the concrete jungle and starting over in a relaxed and carefree environment, away from the stresses of life. He recently purchased 300 acres in South GA within a half hour drive of a mid-size city. During his due diligence (the investigation process, conducted by an investor, on the details of a possible investment) he learned that he could subdivide the land. He plans to retire on 50 acres and then subdivide the rest over the next 5 to 10 years. This is a growing trend among those looking to retire.
How can investors profit from the land?
Some of you are saying to yourself: How can I, as an investor, profit from the land? Are there really so many land opportunities that you can enter this niche market? I have been a party to more than 600 land deals. My observation is that there are millions and millions of landowners willing to sell. Are you surprised to learn that in some parts of the country there are more buyers than sellers? I make a living connecting buyers and sellers. The market needs more investors to participate!
There has been no better time in our history to take advantage of the land. Right now there aren’t enough investors to reap the rewards of profiting from the vacant lots.
Learn to buy land as they are not doing it anymore!
For his success in the real estate sector.
