Land Lost

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Everywhere you look someone is saying or writing that land is protected from a declining economy and that it is easy to become a developer, that tax benefits are afforded to land owners and you can't lose money in land. Nothing could be further from the truth. More money is lost in land than other type of real estate investment. Land is raw material that developers use to make building sites, farmers use to grow crops, and people use for recreation. Seldom will raw land pay for itself. In order for land to have any value other than holding the earth together is demand. The lowest level of land use is recreational. Agricultural applications produce very low returns to investors. The highest and best uses include improving the land with building improvements that have a demand for end users or tenants. In today's raw land environment developers (generally) are not buying land to develop, farmers have limited lending resources and are waiting for prices to drop before buying to assure a reasonable return on investment and labor.

In order to experience any level of success in purchasing land it will be necessary to understand what it means to leverage and how to be patient. Leverage in essence means that the less you put down at the time of purchase means the greater percentage return on cash invested when the property sells. The only problem is that with leverage comes high monthly payments with relatively no to low income on the investment. Every dollar spent in holding the investment drives the ultimate rate of return down. If you are leveraging then every day you own the investment you are losing investment return. If you purchase land with $1000 down and sell it a day later for simply $1000 more than you paid for it the return is 100% on cash invested. In an up market the dynamic changes and profits are possible because of the demand curve. Holding land in an upswing market can be profitable but still requires care in setting the purchase up correctly. Land is a complicated investment and be careful of anyone who tells you different. Developing land is even more complicated with banks becoming involved, city and county planners, neighbors, buyers, real estate markets, and time. Time can kill almost any project. You buy land today in a thriving market and it is entirely possible that by the time you have finished the development the real estate market has dried up, just like the 2006 market leaving thousands of unpurchased lots in the market.

A philosopher once wrote, "Patience is a virtue" and in land buying patience is truly a virtue that will assist in making the right buy. A veteran land buyer will wait it out and when the time is right will make offer that assures low risk and an opportunity to make a profit. Land buying should be all about self preservation. What land sold for yesterday has nothing to do with what you should pay for land today. What you pay should have a profit built into it, period. Have a well researched plan, a profit motive and strong finances. Land is illiquid and not suited for a quick flip. If you are considering land as an investment hire a specialist with expertise in land dealings, do your research, give yourself plenty of time to perform your due diligence and choose the investment well.

Douglas Ferguson has been a successful land broker for over 17 years in California and Idaho and at present is a Designated Broker with Ferguson, Beal & Associates in Middleton, Idaho. Mr. Ferguson is an Accredited Land Consultant and a Certified Land Consultant.

Currently, Mr. Ferguson serves as President of the American Land Institute, Member of the World Organization Land Federation and teaches continuing education in matters of land brokerage. http://www.douglasferguson.net

Land Foreclosure

Have you ever imagined owning a piece of land and building your dream house on it? Deciding if you want to build near neighbors or not? If so, investing in land foreclosure property may be the right choice for you.

Land foreclosure is property that was once financed, and due to default payment of the loan, repossessed by the lender. However, the lender does not want to sit on the property. The land foreclosure property will be marked below appraisal value in order to get the property sold quickly. The longer the lender has possession of the property the more money that will be lost. The lender will be responsible for any new taxes or old taxes on the property. Due to these facts the lender wants to get the land foreclosure sold as quickly as possible. This is a great opportunity for new home buyers and investors.

There are three types of land foreclosure sales: pre foreclosure, foreclosure auction, and lender owned sale.

Pre foreclosure means that the process of the land foreclosure has begun but is not finalized. This gives the original owner a chance to redeem his or her name with the bank. He or she can do this by either paying the defaulted amount of the loan or selling the property to pay off the loan. During the pre foreclosure process, investors and property buyers have a great chance at getting a significant deal on the pre land foreclosure property. The owner of the property is facing an ultimate crisis. The owner is on the verge of losing the property, devastating credit, and other financial burdens. For this reason he or she will be prepared to accept any help that is reasonable.

In most cases, an investor can save up to thirty percent off the appraised value of the pre land foreclosure. Not to mention, the ability to inspect the land before making an offer. It is in an investor’s best interest to have financing pre approved before discussing purchase with the property owner. The property owner may not want to discuss any offers if financing is not already pre approved.

A foreclosure auction is final process of land foreclosure. The owner no longer has ownership of the land. Nevertheless, purchasing land from an auction requires an investor to be educated on the process and experience. It is not the law, but it is more beneficial to the investor to know what he or she is doing, and can make the difference between making a profit and losing money. The down fall to purchasing land at a foreclosure auction is that the property now cannot be inspected and payment for the land foreclosure is expected at the time of auction.

Lender owned sale is a different type of land foreclosure sale. The lender has ownership of the land. The lender will sell the property in a more formal sale at a lower value in order to take a lower risk. However, an investor can expect to save at least twenty percent of appraised value on property. On the other hand, pre foreclosure land or a foreclosure auction may be the most beneficial route for investing in land foreclosure. Though anyone can invest in land foreclosure sale, a smart investor is an educated investor. Do the research and homework before investing.

About the Author

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Was Land of the Lost a good movie?

I can't decide whether to see Up or Land of the Lost. And i heard Lost wasn't that good. Why?

Watch Up it's much better. Land of the Lost is crap!

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