Dirt is Good

By Jordan Taylor

Thinking about investing in real estate? Chances are, you’re considering buying houses, apartment buildings, or perhaps offices or retail centers. These are all excellent investment vehicles, but don’t overlook the opportunity in plain dirt—that is, undeveloped land.

Real estate doesn’t need to have buildings on it to be a highly profitable investment if you know the strategies of buying raw land. “For years, the self-proclaimed gurus have advised against buying raw land, but I have found land extremely lucrative,” says Russ Whitney, CEO of Whitney Education Group, Inc. “The traditional logic has been that raw land can’t generate revenue through rents, so you shouldn’t buy it. But while it’s true that you can’t put a tenant on a piece of land, it’s possible to make as much or more money on raw land than on built-out land.”

An internationally recognized expert on real estate investing and wealth-building strategies, Whitney is the author of several bestselling books including Millionaire Real Estate Mentor (Dearborn Trade Press) and the upcoming The Millionaire Real Estate Mindset (Doubleday), scheduled for release next month. Whitney recommends a number of strategies for successful land investing.

One is to buy ahead of growth. “Big development companies do this all the time, and the average investor can do it, too,” says Whitney. “You can either buy land that’s in the path of established growth, or you can buy land and develop it, which creates growth.”

To determine the pattern of growth in an area, review the aerial photos taken by your city or county over the past five or ten years. These photos are public record and usually available through the local property appraiser’s office. It’s also a good idea to review the area’s comprehensive plan, which will tell you when infrastructure (roads, utilities, municipal services, etc.) will reach specific areas. Your city or county’s general information office can direct you to these resources.

Whitney recommends looking for vacant land that is in the path of relatively short-term progress—typically one to two years, but not much longer. When you find such land, you can simply buy, hold, then sell for a profit. Whitney says a classic example of this is the 20-acre parcel he bought about two and a half years ago. The land did not have water and sewer, and he paid $1.3 million for it. He knew from studying growth patterns and the city’s comprehensive plan that water and sewer would be coming in about 18 months. He did absolutely nothing to the land, and it’s currently under contract for $8.3 million—a profit of more than $7 million. And, he says, this was not an unusual deal.

Whitney also recommends developing land to increase its value. The development process can range from simply getting the zoning changed to putting together a business plan and actually building on the property. “You don’t have to be a huge company to be a profitable real estate developer,” Whitney says. “Once you understand how to do it, you can build serious wealth with relatively small amounts of acreage and capital.”

You should have at least some real estate investing experience and a substantial amount of education on the subject before you start investing in land. Land deals will usually involve larger dollar amounts than a typical residential real estate investment, so you either need your own capital or you need to know how to raise money through techniques such as syndications.

In his latest book, The Millionaire Real Estate Mindset, Whitney devotes several chapters to investing in raw land, land development, and financing these types of transactions. If you happen to already own some raw land—perhaps property you inherited or that you bought as an investment but aren’t sure what to do with—study Whitney’s land investment and development techniques to learn how to put together a strategy that will result in the highest possible return. If there are parcels of raw land in your area and you’re wondering what’s going to be done with them, Whitney’s book will tell you how to find out—and how to get in on the action.

“Once you understand the potential in land, you’ll never look at a vacant lot the same way again,” Whitney says. “This is an opportunity open to anyone, and it’s one of the most powerful wealth-building strategies of the twenty-first century.”

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Formore information about advanced land development training through Wealth Intelligence Academy®, visit www.wiacademy.com. To get your own copy of The Millionaire Real Estate Mindset, go to www.russwhitney.com/mindset.

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