Cheap Acreage Investments
Cheap acreage investments have very little to do with what the land is zoned for, what it can be used for, where it is located, whether there are utilities available or not, whether crops can be grown or not, whether water is available or not, or even if there is a road to the property or not. Instead, these investments have everything to do with price, price and price!
There are countless historical examples of farmland with irrigation systems that was purchased for what appeared to be excellent bargains. Yet crop prices collapsed, demand slackened, operating costs increased, and banks were forced to foreclose on the property. There are also many examples of fully improved lots bordering growing cities that suffered huge price depreciations when an economic recession hit, zoning wasn’t approved, and financing for development dried up. Finally, consider income properties (such as apartments, office buildings, and shopping centers) that were purchased for fair prices, but eventually were foreclosed on because of poor management, excessive maintenance expenses, and vacating tenants.
Conversely, the lowest priced land that can be purchased in the United States of America at any particular time will always, and invariably, be worth more money at some future date. There can be no example shown in the history of the United States where this isn’t true! But the key is to buy the land cheaply enough and to hold it for a long enough period of time. Again, notice that this has nothing to do with where the land is located, the use of the land, the zoning of the land, improvements on the land, or roads to the land—rather, it has everything to do with the initial purchase price of the land!
All investment theories should be tested against solid historical facts. In this case, that becomes quite simple. When the United States was founded in 1776, land was valued in the “wild, unexplored West” (the region extending from the original 13 colonies to the Pacific Ocean—none of which was even part of the new nation at that time) for as little as five cents per acre. Obviously, this land wasn’t improved and had no utilities, no water, and no roads. Now, 235 years later, much of this same land is still unimproved, with no utilities, no water, and no roads. Yet today, it is very difficult to find any of this land for under $250 per acre. So without anything whatsoever being done to the land, it increased in value from five cents per acre to $250 per acre—an increase of 5,000 times!
Fortunately, people interested in cheap acreage investmentsdon’t have to wait 235 years for a payday. But they do have to buy the land cheaply enough, and then relax and wait for at least a few years. There are ways to make money faster, but few that are safer or more predictable!