Lowest Priced Acreage |
When people see dirt-cheap land for sale, the first question they usually ask is, “But can the land be used for anything?” Following are just two historical 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 goal was to provide a source of irrigation and turn this dry, desolate and uninhabitable area into a subdivision of lush farms. Initially started by private promoters, the project eventually was 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 dirt cheap land 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 has happened to these dirt-cheap land prices during the last 100 years in the Imperial Valley? Much of the land is still without water, still desolate and uninhabitable yet it is very difficult today to find land in the Imperial Valley for less than $1,000 per acre.
How To Profit With Land
Various approaches to investing in land can range from “expensive and risky” to “affordable and safe.” On the “expensive and risky” side, let’s say a person purchased five acres on the outskirts of a growing city for $435,600 ($2 per square foot) with the intent of rezoning the land and developing a residential subdivision. This is a high-risk approach for the following reasons:
How To Profit With Land
Various approaches to investing in land can range from “expensive and risky” to “affordable and safe.” On the “expensive and risky” side, let’s say a person purchased five acres on the outskirts of a growing city for $435,600 ($2 per square foot) with the intent of rezoning the land and developing a residential subdivision. This is a high-risk approach for the following reasons:
Rezoning might not be successful.
Financing might not be available to construct homes.
Loans may not be available for people to buy the homes.
The economy may weaken, causing demand for homes to evaporate.
The end result might well be a total loss.
On the “affordable and safe” side, let’s say a person did nothing but acquire 500 acres of rural land for the low price of $125,000 (only $250 per acre) with the intent of holding the land for some years into the future. This approach would be much less risky. In fact, history has proven that it is literally impossible to lose money by owning land if it is purchased cheaply enough and held long enough.
Suppose in 1920 (90 years ago), a grandfather had been given the choice of placing a sum of $100,000 in one of the following investments:
Studebaker stock (one of the leading Dow Jones stocks of the day);
The deed to $100,000 worth of rangeland (20,000 acres worth $5 per acre), which he would place in a safe deposit box to be opened by his grandchildren 90 years later (in 2010).
Which asset would be worth the most to his grandchildren today (in 2010)?
Studebaker stock certificates would be worthless; the company went out of business and no longer exists!
20,000 acres of rangeland would be worth at least $5 to $6 million!
Buying cheap acreage and hanging on to it through the years might not be the fastest way to make money, but it could be one of safest and surest ways!
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