Land will be THE BEST Investment for the Next 40 Years – Part 3
January 19th, 2012 at 3:30 pm | Type:
Author: Ned Massie | No Comments
As we discussed in the previous articles, in 1964 my father bought 80 acres in the country for approximately $65 per acre. At the time he was convinced that he had made a bad decision.
47 years later, after the value declines experienced in the Great Recession, that 80 acre tract of land is worth 40 times what he paid for it. Is there any other asset or investment he could have made that produced a higher rate of return over the 47 years?
It is important that we examine some of the reasons why his investment rate of return was so impressive:
- Inflation – Certainly played an important part in the increase in value but is far from the whole story. Good land is a phenomenal hedge against inflation and the land that he bought absolutely accomplished that investment objective.
- Increased Demand – Population growth means increased demand for food and fiber. When the land was purchased by my father, its highest and best use was crop land and timber land. Today, the land is mostly timber land but it has other potential uses as well. As the population of metro Richmond has increased the edge of metro Richmond has gotten a lot closer to my father’s 80 acres. Therefore, reflecting what land can provide, the demand for land has increased over the 47 years.
Of the two components, the increase in demand for a variety of reasons far outweighs the inflation in terms of determining an increase in value of 40 times the original investment. In today’s uncertain world, there is a lesson to all those who want to place their money where they can get the highest rate of return and be secure.
We enjoy helping folks with their land investments because we understand that not all tracts of land are created equally. Call us, we would like to help you.
Filed under : Market Perspective, Ned Massie
