Investing in Land - Victorville & Surrounding Area

Published on 12/16/04
By Tom Birchtold - Apple Realty

Area includes Apple Valley, Victorville, Adelanto, Hesperia, Spring Valley Lake, Lucerne Valley, Silver Lakes, Helendale and Barstow

You are going to learn about investing in Victorville California land. Victorville Land is probably the most misunderstood investment. More people have lost money in land, but people have also made millions. Just think if you had owned the land under South Coast Plaza in Irvine Southern California, today you would be worth millions. Those opportunities still exist today.

Victorville Land Buyers Beware

Buying land is simple, but one mistake can become a poor investment. For example, vacant land can have several unforeseen problems. In the high desert, we have yucca trees and the law protects them. Special permits are required to move them and only by yucca tree specialist even if the yucca trees are dead. This simple oversight can be costly...

There are several issues like grading, soil content, sewer and the list goes on. Smart investors don't like surprises, so they hire professionals to avoid these problems. As professionals we are part of the local community attending meetings. We work with the building departments, local businesses and everyday local contacts to avoid these problems.

Watch out for sources offering foreclosures, tax sales, auctions and bankruptcies. These properties may have problems. So you could be buying someoneâ€™s problem. You will spend weeks investigating these properties plus all the gasoline money. From experience, I can tell you that most of the good properties are gone before you see them. That's why the so-called experts make their money selling books and foreclosure lists. Most of these sources are advertised to the amateur investors.

BEWARE OF LAND CONTRACTS

Some people sell land using LAND CONTRACTS. Land contracts can have several issues. 1) A Land contracts is another way of financing property without a deed of trust. 2) Land contracts usually benefit the note holder (property owner) with high interest on over priced property. 3) A land contract usually does not give the buyer the title to the deed, so the buyer has very limited use (building, selling, etc.) to the property. 4) Land contracts are usually written very vague, so the person with the land contract (property owner) can interpreted the contact as they feel because they hold title.

FINANCING LAND: We suggest BUYERS have the landowner carry back a note using a deed of trust. This way the buyer has title (use) to the property and can payoff the note easily. This is the typical method of financing property.

Misconceptions about Land

More people have been financially successful in real estate than any other investment. So why do people shy away from investing in land? There are several reasons, but the major reason is lack of knowledge. Most people have been sold that if you buy this land today, it will be worth millions tomorrow. This is called speculating. Speculating is buy today and HOPING the value will increase someday.

Real Estate investment books tell us that real estate will increase in value over time, so speculating in land should make us money. NOT ALWAYS TRUE! Speculating is the #1 reason why people buy land and are disappointed. Most people know someone who bought land years ago and these people are still waiting for the payoff. Speculating has given Investing In Land a bad name.

Before you buy land, you have to have a strategy, a plan of when you will sell. Your plan needs to define your target buyer (Commercial, Industrial Development, Retail Stores, Manufacturing, Office/Warehouse Facilities, Business Park, Airport Complex, Residential), all cost, zoning and demographics so that you can determine your purchase price. Always remember the money is made in the buy and not the sale. The sale is the payoff for making the right buy. This is called investing, not speculating.

Financing Land

When buying real estate, financing is easy. Typically, banks do not loan on land because there are no improvements. Sellers provide financing for several reasons. Seller financing makes the sale easy, the seller can save taxes and financing provides an income stream.

Anyone can buy land if they can make the payments. The seller is not concerned about income and assets because the seller holds title and the land foreclosure process is simple. Since buying land cost a lot less than homes, the payments are low with little or nothing down. Low payments gives the buyer more opportunities to leverage into more land. Land is easy to finance and leverage.

Why Invest In Land?

Land is a hard asset, meaning you can't move or wear it out. Other investments, like stocks, are soft assets. Most investors have recently experienced soft assets and this requires no explanation. The ownership of land controls both hard and soft assets. For example: Businesses need facilities, therefore land controls the business and the facility it occupies.

We all know location is the key to making money in real estate. All metropolitan areas start and then progress outward. Itâ€™s like dropping a stone into water and the ripple moves outward from the center. Here, Los Angeles is the center and the ripple (rings of progress) have moved through the San Fernando Valley, Orange County, Riverside and so on. Land is a good investment once you understand how to buy. Land will always be in demand because you can't make more of itâ€¦

Land Investment Strategies

The basic concept is to buy land by the acre, add value and sell land by foot. There are two proven investment strategies for buying land: 1) Return-on-Equity (ROE) and 2) Buy-and-Hold (BAH)

Return-on-Equity (ROE) requires that we only buy land that will double our money in three years. Before we buy the property, we need to know our target buyer, selling price, all cost, etc. We do not buy land unless we have a plan to sell it. Once we know our selling price and our cost, we know how to calculate our purchase price. This is called Investing, not speculating

Buy-and-Hold (BAH) sounds like speculating, but not if we hold the LAND FOR FREE. Using this strategy, we have decided to keep the land longer than three years. So we buy a large lot, sub-divide and sell the smaller lots. Payments from the small lots will pay for our remaining lot. Once the smaller lots are sold, our lot is free. Since we have no cost, time is not a concern. We make 100% profit on our lot.

Where to Invest in Land

We recommend Apple Valley (ring of progress) is the place to invest. The conversion of George Air Force Base to Southern California Logistics Airport (SCLA) will provide major corporations with logistics needs with a logistics gateway to the Western United States. The areas is growing. The population is expected to double from today's 400,000+ residents in the next ten years. Recent projections are for 500,000 by 2005

You can go to just about any real estate office and they have land listed on the MLS. These agents sell homes and sell land as a sideline. They help speculators. Buying land as an investment that requires knowledge. Who are the potential buyers, zoning requirements, easements, soil content, potential neighbors, building permits in progress and the list goes on. Without this information you are speculating. We can provide this information, so you can make intelligent investment decision.

Selling your Land

Selling vacant land is more than simply being on the MLS (Multiple Listing Service), putting a sign on the street or placing an ad in the newspaper. If you ever had land that didn't sell than you know what I am talking about.

SELLERS BEWARE: There are several ways to get comparable properties to find the value of your vacant land. Inexperienced people may use comparable properties from a Title Insurance report. These reports are excellent for homes or buildings, but lack the necessary information on vacant land. The Title Insurance companies use the tax assessors information to create their reports. This works great for homes because they know the street address, square footage, bedrooms, bathrooms, year built and so on. But for vacant land you need to know zoning, Lot location (street), electric, water, etc. None of this information is available on the tax assessors records. Without having this data available, the Title Insurance report can list properties with different zone types, major streets vs dirt roads, hills vs flat land and so on. We have seen reports with comparable properties ranging from $200,000 to $1,500,000 and yet the actual property value was $300,000.

LAND VALUE: We suggest you get an experienced RealtorÂ® who understands plat maps, topo maps and how to compare vacant land. Title Insurance companies provide great services, but their property comparable reports are usually designed for homes and buildings. Any questions ask your Title Insurance company.

Most Land on the MLS provides basic or incomplete inofrmation, therefore the buyer has to do the research or hire a professional. As professionals we create land maps, analysis of comparable properties, plat maps and so on. Serious investors see the value in our work to avoid costly mistakes and they make sure we get paid for our services.

Buying land is not like a buying a house. Ususally, there are no street addresses. We have to print plat maps and reviewed them to physically locate these properties. Tom also uses Satellite pictures. This takes time, sometimes a few hours. As professionals we know how to do this...

If your looking for land you must have parameters to target properties that fit your needs. Parameters like: residential or commercial - Number of acres - Total amount of money you want to invest - Build today or Buy and Hold and so on. Then I can search for the 5 best properties that fit your needs. Because of the preparation work, I only work by APPOINTMENT so he can prepare this list of properties.

See my web site for more information www.VVLand.com

Have a Great Day...

Tom
Apple Realty