For The Big Money
Look For Stress Points
Land-4 is the fourth article exposing the secrets of people who make the really big money in land investing.
A city expands when it sees that demand for land in an area is greater than it can absorb. At that point they have to either re-zone for greater population density or annex more land.
There is some serious money to be made when the zoning is changed. But there is more money to be made if you own the land that is being annexed.
Some signs of stress in a city that could prompt change include:
1. Property values go through the roof in a particular area
2. Traffic jams create problems on a daily basis
3. Illegal residential suites start popping up all over
4. People start applying to the city for bigger and bigger buildings
When you see these signs you can safely buy property in that area and it is likely to increase in value quickly. You'll make more money if you get involved with building projects instead of reselling existing property.
If you can buy a relatively large piece of land you will make good money if you hold it for three to five years. By then the strain in the area will be so great that developers will pay you anything you ask.
A bigger piece of land is better than a small one because you will end up dealing with a big developer rather than an individual house builder. Big land developers have more money. If your land is a small part of a larger project, they won't mind paying a premium to pick up the last piece.
The trick is to buy in an area that is already experiencing stress. Of course, the earlier you buy the more profit you will make (up to a point). If you buy too early you will still make good money but your per-year rate of return will go down. You might have been able to make more money in different location.
If you want to buy in an area the city is expected to annex you can pick up the land for peanuts two to three years before the city starts to talk about it publicly. Once the city starts talking about it people will start buying up that property and prices will jump. You have to buy early and hold. Land investment requires patience, but the rewards are worth it.
Again, look for signs of stress and buy just as you start to see property values going up. Don't wait for the big increase in price before you make a move. That's when you want to already be owning the land rather than afterwards.
If you are interested in investing in land and don't have time or inclination to do it all yourself you can join a group of investors. If they have been doing this for a long time you can walk in just as an investor. They will do all the work and share profits with you. You would contribute your money, they would contribute their money and expertise.
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