Post: #1

I was curious if anyone does "land banking" basically buying up land where you think development will move to, buying low and selling high once hotels, restaurants, airports and highways come through.

This is how many of the bigshots have made their wealth. It's nothing new. That said I can easily see someone uneducated in real estate and land buying getting taken advantage of or overpaying. This is something I'm just starting to look into, was curious if anyone else has done this?

I know recently there was a thread, don't recall the title but someone mentioned doing this in Africa. I have no interest in doing this in Africa but had recently been looking at potentially doing this in the Tulum Mexico area. I think the Riviera Maya area will continue to develope further south just as Playa has turned into a large city in the past 10 or 20 years. I think at some point it may expand allthe way to Belize but in the short term Tulum real estate is already going up from the little research I've done as it develops further.

Here's my issues. One I'm concerned about buying land outside the US, just because it's not something I'm familiar with. Secondly, I'm pretty sure the deals aren't going to be found looking on sites like landwatch and realtor.com. I imagine you have to have some contacts on the ground or better yet be there yourself.

Curious to hear of your guys experiences if anyone has done this? Also what are the risks? I know sometimes someone can build something on your land and basically if you don't say shit within a certain period of time it essentially becomes theirs. Are you responsible if people get injured on your land or dump on your land?

Also, if anyone knows of any reputable places to find decent deals please share.

Post: #2

As an investment, owning land is probably a low risk low reward.

As a way to make money?

You're gambling. Not only that, you're gambling against people on zoning boards, with money who are decided where to invest, who know much earlier than you on where plans are being discussed.

Unless you're one of those people.

As long as you understand that. There are a lot of people planning and making decisions long-before the general public knows about coming land developments.

I know Dave Ramsey, who I respect for things like this, says, while land development (value added) or owning real estate can be great investments, owning vacant land is a bad investment.

I would assume if you're in a place to buy vacant land and sit on it, you have decent money to throw around and are more experienced than me at this anyway.

Post: #3

That's one of the aspects of real estate investments, albeit what you describe is at best an educated guess unless you are in the know upscale. Almost all politicians can do it for example in the US free of persecution as they can use ALL INSIDER KNOWLEDGE - passed a law on that a few years ago.

I know some investors who made millions out of it - read up on basic literature - it will give you a better idea on how to make money off it.

I found this little book very helpful - it was the basis for the CAIA educational program for a few years:

Real Estate Finance and Investments: Risks and Opportunities, Linneman, Peter. Linneman Associates, 2004.

If you read that you will have a better idea on how to plan any moves in real estate - using insider knowledge is not one of the things you can really plan on.

Post: #4

(03-23-2015 02:21 PM)heavy Wrote:  As an investment, owning land is probably a low risk low reward.

As a way to make money?

You're gambling. Not only that, you're gambling against people on zoning boards, with money who are decided where to invest, who know much earlier than you on where plans are being discussed.

Unless you're one of those people.

As long as you understand that. There are a lot of people planning and making decisions long-before the general public knows about coming land developments.

I know Dave Ramsey, who I respect for things like this, says, while land development (value added) or owning real estate can be great investments, owning vacant land is a bad investment.

I would assume if you're in a place to buy vacant land and sit on it, you have decent money to throw around and are more experienced than me at this anyway.

I'm interested in this, however at the same point very hesitant to get in for the exact reasons you said. My first thing is the people who really make money in this are people who have some inside connection and know a highway is comming or something and buy in advance knowing they will be in for a huge return.

I'm not as concerned so much about whether land I buy will improve although obviously thats important. My concerns are more does Mexico have anything like eminant domain where I can just have my land taken from me and things of that nature.

You bring up a great point though, those who make big money off this stuff are not investing they typically probably have inside knowledge and its basically a sure shot.

Post: #5

Just picked up a lot in Puerto Escondido Mexico five min. walk to beach $26K US. A new highway going in will cut drive time from Oaxaca City or Mexico City by 5 hours. Planning to either build a small beach house or maybe flip if value goes up. Will be interesting to see how this works out.

Post: #6

I like the idea of doing this but the problem is, you're all speculation and you must endure negative cash flow for years, possibly 10s of years, before getting a payout (insurance and taxes are very real expenses).

Where as if you go and purchase a cash flowing investment (think single family home), you not only make cash flow every month but you also see some appreciation on the back end.

I spend a good bit of time in Playa and often have a look at the lots in the area - surely, without a doubt, the area is appreciating at a very fast rate. But as you already said, the people that are going to be really making the most here are the local RE folks in the area that know the area inside and out.

Post: #7

(03-23-2015 04:25 PM)joelf Wrote:  Just picked up a lot in Puerto Escondido Mexico five min. walk to beach $26K US. A new highway going in will cut drive time from Oaxaca City or Mexico City by 5 hours. Planning to either build a small beach house or maybe flip if value goes up. Will be interesting to see how this works out.

If you don't mind sending me a PM with some details if you don't mind sharing as far as where to look for properties or area it'd be much appreciated

Post: #8

(03-23-2015 05:27 PM)sammybiker Wrote:  I like the idea of doing this but the problem is, you're all speculation and you must endure negative cash flow for years, possibly 10s of years, before getting a payout (insurance and taxes are very real expenses).

Where as if you go and purchase a cash flowing investment (think single family home), you not only make cash flow every month but you also see some appreciation on the back end.

I spend a good bit of time in Playa and often have a look at the lots in the area - surely, without a doubt, the area is appreciating at a very fast rate. But as you already said, the people that are going to be really making the most here are the local RE folks in the area that know the area inside and out.

I think taxes in Mexico are so small it's almost irrelevant. Insurance however may be another story, I could see that being expensive.You do make a great point though, where a rental property is making you income and you can sell for a lump sum either, with land speculation your basically sitting on nothing and like you said paying fees, taxes, insurance all for nothing. One other thing in Mexico I know hte trust costs like 2k to setup, I don't know how long they are good for but heck if it takes 10 years to appreciate potentially you would have to renew that trust once or twice in that time at 2k a pop.

One thing I have heard people talking about in Playa area. I forget the exact term but I hear the good deals are not on land that has already been subdivided and titled, the good deals are basically on indian land or mayan land or whatever buying direct from them. This I hear is where you get the best deals but also probably more bureacracy and headaches, as well as probably added risk if you don't know how to navigate real estate and law there.

Post: #9

Quote: This is primarily my line of business. Mexico would be a good place to start and buying from villagers/tribesmen would be the most profitable albeit risky. You need to live in the area you are buying. Know everything inside out (officals, police, brokers, city planners etc.), block money for 3-7 years, and after this you will see huge rewards...

This business pays well, and it definitely keeps you tight for the time you are holding, but when you sell or decide to develop is when you see huge rewards, much greater then many other real estate investments.

I dont think this game works very well in North America/ Western Europe cause people have already made big money in this game, and the appreciation factor is not as a fast as it would be in developing countries buying from locals.

Post: #10

Ps you can also learn to farm your land in the meantime if its possible, which can bring in MAD income if you know how to do it. Unfortunately, I have not been able to master that line of business up until now, but its definitely a goal to do so.

In the meantime you need to learn, how to get the right zoning which will make the land valuable, service it (water, electricity, fencing), and also try to get the building permits, so it becomes easier to develop, or to sell in the future.

this is a very TOUGH business and time consuming, but it pays handsome dividends.