Raw Land
I would like some input on whether or not raw land is a good way to make money? Buy and hold.
The Carleton Sheets course that I studied did not recommend this. However, raw land seems easily to get.
Thanks for your comments.... 
I think raw land is a good way to make money if you know what you are doing...and a good way to lose money if you don't.
Due diligence for the eventual disposition of raw land includes, but is not limited to, zoning, traffic issues, due process (if applicable), construction, sequencing, phasing, sewer and water or on-site septic and well, which leads to soils, marketing, and on and on.
What is your goal relative to REI though?
Do you want to be a developer?
Build?
Make quick cash?
Do you have land that interests you in mind?
Alot of land that is easy to get is not always developable.
Hence, DUE DILIGENCE.
Rawish land.
I went out into a desert area where land was 25 cents the acre. This was an area very close to present day Palmdale. I found a 660 acre parcel. I talked to the resident Coyote who told me times were tough and the Rabbit population had developed a strange desease which gave him the hic cups.
I then looked up and checked all the horizens. To the North was a range of what passes in Calif. for mountains. I observed a valley to the North in the range of mountainy hills. I observed a light layer of snow on said hills.
Having now done due diligence. I had my handy well digger with his bent twig and chewing tobacco, then dig his first exploratory hole. I drew a line on the map from the Valley in the hills to my north on a down falling elevation. Where it crossed my land boundry his little chug a long started spinning the bore pipe in a downward direction.
I smoked, he chewed and the coyote sat and waited for the water. He knew it was there, I knew it was there and the well digger knew it was there.
We hit big. Had to be there we were like in the mouth of a funnel. That Aqua has never pulled down even an inch and we must be in the center of it.
Four cuttings per year of Alfalfa, The tenant farmer buys a new pickup every two years. His kids go to Easter Schools where they learn a strange brand of English, wear Brooks Brothers Clothes and lace their conversations with quotes from the Wall Street Journal. Now call there parents Mums and Dads.
The Coyote is now gone. I recite a little prayer. For his offspring I seeded the place with Jack Rabbits and the new generations shoot craps and tell stories until way in the night. Their howels are like music, the music of water flying out of pipes that revolve on large steel wheels, rolling over the land. The desert land of no value.
Go do the same, just remember proper due diligence, ask the Coyote and the funny old man with the willow wand.
Cheers Lucius
I've never been to the desert or had conversations with coyotes and rabbits. However, I agree with Lucius that there's great potential in land. Be a developer (put under contract and do something to enhance the value such as subdivide and then flip without taking title or take title and land bank). Income may not be as immediate with houses, but, as one builder told me many years ago, there's more money to be made from land without ever sticking a shovel in the ground.
Due diligence is key and much of it. Suggest checking out municipal master or comprehensive plans to scope out areas -- growth now, growth in the future, highest and best use.
Tree weeks ago, I put under contract a farm with an old house and 10 acres of land under it's pretty deed. While signing the legal paper, the funny old man told me the story about the love of his life.
Once upon a time, he met a beautiful girl he fell in love with but as with the other nice girls that didn't like to be seen with him in public, Beatrice would not go out with him or marry him unless he become filthy rich. Ah, that was not nice form her but at list she gave him a choice. So he thought so he went to work. Dear friends, what she sad word for word might not be appropriate for children under 15, therefore I had to skip that part and continue with the hart braking rest of the story based on hard work, more work, and more hard farmer's work.
Hopping to get reach, Sam tried very hard many different things all over the place, but with no help or luck on horizon, he was desperate. Being young and naive, he worked here and he worked there then one day he thought he got lucky when he meet the wise old man of that time. The old man liked to taut the story about how he got rich drilling oil wells in prairie. It never happend but Sam was believing type. Desperate and with no money, he scratched his had behind the ear then he went with another young man, apparently digger in direction the old man have pointed, looking for a peace of land that will make them both reach. They dug left and they dug right until his digger friend realized that the old man nastily pointed into wrong direction where yards under the earth's skin was a hard rock that destroyed all his drills. Without telling why, he stop digging on empty promise that he'll too get reach once they hit the "spot". Tom left his drilling equipment with naive Sam and went West to Holywood, where with the help off his Asian boyfriend, he became a Sunset boulevard movie star entertaining aduts all over the world. He was instantly rich and Sam, well Sam was still digging the land in hope to become reach alike the old man whose words he trusted 100%.
Desperate and out of money, my seller finally settled down on a 10 ackers farm starting as a stable boy. He work hard more then 25 years combing horses and milking cows, marring the girl from across the border and after quarter century of sweat and pain he "made to the top", buying the land that he worked on the majority of his life.
I have sympathy for the old man but I don't trust every wrod he says. I learned the leason form his story about the nasty old man who purposly pointed in worng direction. His story tought me that you have to not trust the one based on his age unless you want to find yourself diging for the rest of your life. trust your instincts and common sence and you'll go far.
I am going to sell his old farm to a wealthy neighbor in couple of weeks but not until I help him move to a new place where he'll happyly spend his last days. In exchange, he promissed not to point into wrong direction when a young boy or girl ask him the wisdom of his life. He sad Yes - and I wen to work.
Sam is also willing to learn how to use internet and I might bring him to TCI to tell his stories about the land. Be nice to him. He is an old man with a lot of stories to tell and promisse to tell the truth.
As you can see, not all stories about the land are $-happy ones. Weather my old Sam (that's his name) failed because he didn't speak Coyotee or because he didn't know how to make the CD's and sell it on ebay (or elsewhere on the internet), is not important. What's important is that I learned to measure and weight "every stone that resembled gold" but it wasn't, before paying the heavy price of missguided trust.
Don't take the selsman storry for granted. Use your common sense if you do not want to drill the desert for the rest of your life.
And yes, the land is the faundation of all RE wealth. Consider it carefully. [ Edited by DealerJo on Date 03/14/2004 ]
There are as many varied types of raw land (or rather uses) as there are ways to make money on raw land.
Timberland
Farmland
Industrial
Comercial
Residential
Vacation
You name it! Specalize in a particular type of land in your area. Know the market. Know how to add value. You can make a ton of money investing in raw land.
It’s already been said, but "due diligence" is the definitely the key. As an example, a friend of mine recently bought 22 acres for 30k, from an estate sale with an out-of-state beneficiary. Within a matter of a few weeks he had one offer for 250k then another one for 500k from two different developers. He did his due diligence, and it paid off well.
I am also testing the waters in this area. I juts got 35 acres under contract this week for 16,500 an acre. It is right next to the fastest growing community in the US. (The Villages FL). I was offered 1,500 an acre profit the same day that I got it under contract. I turned that offer down. I think I can get much more but, I will settle for less than than the top price after I settle in a little bit and the smolke clears on this parcel.
I have done a very quick due diligence on this property but the key is: this area is hot, hot, hot. Every one is trying to buy here. Parcels up the street are going for 22,000 to 30,000 an acre. Mine is in the city limits with a very good possibility of city utilities. Crossing my fingers on that. That will be the deciding factor on what I get in the end.
Ricker, that is a hot area my in-laws live in Continental CC.
Remember, "a bird in the hand is worth two birds in the bush".
Good luck!
Whats the best way to determin the value of a property? I mean in some areas its pretty difficult to pull comps.
Jimbezy,
If you're talking about land zoned for residential development, I use a combination of rules of thumb and pro forma. Raw land value depends on the projected sale value of the end product (house on the lot) and the per-lot improvement costs:
end product value X 25% minus per-lot improvement costs = raw lot value
To ball park improvement costs (street, curbing, sidewalks, etc.), you can either 1. multiply total linear feet of proposed street by some area-specific factor (in my area it's $250/LF + water & sewer hook-up fees or $150/LF + cost of well & septic); or
2. if you don't know total LF of proposed roadway, then multiply the minimum lot width as required in the zoning district by either $250 or $150 (plus applicable W & S costs).
Pspiers, yes it is a hot area. Maybe the hottest in the Nation! The expansion from The Villages going right near your in-laws at Contintel CC soon.
I have those 35 acres under contract and I now have another 85 acres and a subdivision with 37 lots left to go with it under contract. Today I will try to find other local investors to go in with me but yes, it is such a hot area everyone from all over FL is trying to buy here. It is a land grab mentality! :-D
Hey Ricker... howdy neighbor!
I've been in land development for a number of years... done thousands of acres... moved here a couple years ago to raise horses and enjoy the fresh air. I live about 5 miles from the Villages and am just amazed at the growth... what is it... another 30,000 homes in the next ten years??
My 2 cents... I don't believe using a lot (or any) of your own cash is the way to go. There are enough sweet land deals (just about anywhere) to avoid tying up your cash or credit!
Ken Wade[ Edited by NancyChadwick on Date 04/05/2004 ]