CONSIDER LAND IN YOUR INVESTMENT PORTFOLIO
by Stan C. Strom
March, 2007

Many of you members of AZREIA have made investments in residential “fix and flips” and speculative new homes. In the first quarter of 2007, however, there have been 7,557 foreclosures in Arizona, up 92% from the same period last year, and 4,862 of them here in Maricopa County, up 109% from the same period last year. The mortgage crisis is being felt coast to coast due to the rising interest rates on the adjustable sub-prime mortgage market. According to a recent article in The Business Journal, April 6, 2007, “Foreclosures create a pressure on the market that can drive prices down.”

While some economists predict a "bear” market similar to the RTC days, I’m more bullish on the land market here in Arizona than ever before. That’s because our market caters to the 82 million baby boomers with cash that are not necessarily driven in their investment decisions based upon a job. Further, I’m not promoting “over-priced” land on the fringe of Phoenix. My staff has researched private land in the state based on water supplies, transportation, demographics, politics, topography, elevations, county zoning stipulations, wildlife, vegetation, medical facilities, retail, schools, airports & over-flight zones, legal access, and more. These combined factors account for value based on location. We take that information and define “hot spots” for our investors.

No matter what your opinion is on the housing market, I hope you don’t lose faith in real estate. Our company provides valuable data, mapping, demographics, and analysis of the emerging “hot markets” upon which our clients have relied and consistently made profits of 100% - 400% within 18 months. With leverage, the cash on cash returns are exponential. The underlying factor here is that only 17% of the state has “private” land and there have been 202,000 new adults moving here every year. Further, I have discussed in previous articles about the concept of creating wealth and income from five splits. Under this concept, there are significantly more people willing to pay more money for smaller parcels. Hence, buying a land parcel and splitting it into five smaller parcels is one reason why I’m bullish on this investment type.

On May 19th-20th, I will be speaking at the 3rd Annual Real Estate Investing – Making it Work for You! Conference & Expo. I plan to show you the many benefits of adding vacant land to your portfolio. For example, we’ll begin that session with how to identify and evaluate land properties. There are many “hot” spots for investments across the state and there are some that will require you to hold your land for a longer period. We’ll talk about seller carry-back financing and using your qualified retirement account to purchase land tax free. Our booth will be staffed by sales professionals who will be available to discuss several land properties where the initial down payment can be as little as $10,000.

I hope you’ll take the time to consider land in your investment portfolio!