Playbook #080: Raw Land
🖼️ The Big Picture
“Buy land. They’re not making it anymore.”
-Mark Twain
The argument for investing in land — for the right investor with a lot of cash and patience — is easy: supply and demand.
There’s a limited amount of land available, especially around major cities that have large amounts of in-migration… and supply in America is short more than 5 million homes.
Wealthy investors like Tito Beveridge (founder of Tito’s Handmade Vodka), Bill Gates, and Sebastian Drapac have been buying up massive amounts of land and reportedly quadrupling their money in as little as 4 years.
Granted, land holders who bought in the years prior to the pandemic timed it well. They benefited from the massive increase we’ve seen in real estate values with low interest rates and unprecedented economic stimulus — so we may not see those kinds of returns again for some time.
However, over the long-term, holding land can be a profitable — albeit risky — bet. You can add value to the property by subdividing, rezoning, or adding utilities. It can also be cash flowed through leases for billboards, cell towers, ranchers, or utility companies.
In general, a long term “buy and hold” strategy would suit a wealthy investor best, while smaller investors might consider investing in a REIT, or even “flipping” land (for those who like the appeal of “wholesaling.”)