Here is just another reason to look at a land investment… A hedge against inflation…
Another factor that makes land such an attractive investment today is that it is a hedge on inflation. The recent influx of dollars into circulation spells almost certain doom for the U.S. dollar to continue to inflate and lose its value. However, land is a low-risk option for your money and is not subject to the volatility of the stock market.
Take this excerpt regarding the current inflationary fears from a recent interview that CNBC had with legendary investor Jim Rogers, CEO of Rogers Holdings:
“Markets do not trust the governments’ plans to keep struggling banks alive and investors will only calm down when the companies with bad assets are allowed to go bankrupt”, legendary investor Jim Rogers, told CNBC recently.
“The way to solve this problem is to let people go bankrupt,” Rogers said.
“Then you will hit bottom and then you start over. The people who are sound will take over the assets from the people who aren’t sound and we will start over. This is the way the world has worked for a few thousand years.”
“The current rescue plans, which will force governments to issue more debt, print money and flood the markets with liquidity, will flare up inflation after the crisis is over and will create worse problems”, Rogers warned.
“We’re setting the stage for when we come out of this of a massive inflation holocaust,” he said.
“Many people bought 4-5 houses with no money down and no job… you think we’ll just say well, that’s too bad, we’ll start over and nobody loses their job? Be realistic.”
Economies who did not take part in the subprime bonanza are likely to suffer along with Wall Street and the developed economies as the crisis unfolds, he warned.
“What about all the people in countries that minded their manners, saved their money, didn’t get overextended and now all of a sudden they’re being asked to bail out a bunch of guys on Wall Street who were incompetent at best and some of them crooks?”
“I thought it outrageous that anybody has to step in a bail out a bunch of 29 year olds driving Maseratis,” he said.
“There are not many safe havens in the volatile markets”, he said.
Well, it is hard to disagree with Mr. Roger’s proven track record, however, there is a hedge that is a safe haven and is neither subject to general commodity deflation nor the volatility of the stock market…Land investment.
Another factor keeping the land market stable — it hasn’t been hit as hard by the credit crisis. Most land buyers put down 20% on their purchases and the industry, for the most part, avoided using creative financing which got the rest of the real estate world in a heap of trouble. If you view an investment in land as a long-term strategy and avoid leveraged positions, buying land might just be the best investment option for anyone wondering what to do with their money.
“Buying land on time with a long-term fixed rate, coupled with tax-deductible interest and cash potential from a partial sale or rental, is a strategy that floats over turbulence,” according to Curtis Seltzer, in his post In a Recession, Does Land Offer Refuge? on LandThink.com. “Undeveloped land that has marginal characteristics—so-so location, limited uses, negatives—will not do well. But quality land will ride out a recession.”
Leave me a comment and let me know what you think.
