Cheap Acreage

The term “cheap acreage” generally means land that can be acquired for under $500 per acre. This applies to a very tiny percentage of all the land for sale today in the United States. As inflation increases with massive government spending over the next few years, cheap acreage under $500 per acre will soon be a thing of the past. While the federal government can crank up the printing presses and create more paper money, it is impossible to create more land. Thus, there will be an ever-increasing amount of paper money chasing the same finite supply of land which is a formula destined to cause higher land prices in the future.

Some people might ask what cheap acreage can be used for other than grazing cows, hunting, camping, recreational purposes or long term investment. Following are just two 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 purpose was to provide a source of irrigation and turn the dry, desolate and uninhabitable area into a subdivision of lush farms.

Initially started by private promoters the project was eventually 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 cheap acreage 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 happened during the last 100 years regarding prices for this cheap acreage? Much of the land is still dry, desolate and uninhabitable, yet it is very difficult today to find land anywhere in the Imperial Valley for less than $1,000 per acre.

The Rio Rancho Story

A more recent example of cheap acreage would be the city of Rio Rancho, New Mexico. In the 1960s, AMREP Corporation purchased 55,000 acres of cheap grazing land located north of Albuquerque for just a few hundred dollars per acre. AMREP began subdividing the land into residential, commercial and industrial parcels and initiated an aggressive nationwide sales program.

In the 1970s, the federal government indicted the top management of AMREP for, among other things, fraudulent activities, because they touted the land as a good investment. Several key executives were convicted and actually served jail time. In 1981, Intel built a $50 million manufacturing plant in Rio Rancho that created a large employment base. In the ensuing years, thousands of people moved to Rio Rancho.

The initial representations made by AMREP that the land was a good investment proved to be true: the 55,000 acres purchased for just a few hundred dollars per acre and resold to the public is now worth many millions of dollars and is basically a suburb of Albuquerque.

The Moral:

History has proven that it’s virtually impossible to lose money owning cheap acreage if it is purchase cheap enough and held long enough!

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