Making Money in Real Estate Speculation

Ever watch Gone with the Wind? Remember that scene early on when Scarlett’s dad-before his mind with the wind-tried to sell Scarlett on the importance of land? He didn’t call his estate Tara for nothing. Scarlett eventually came around and learned the lesson of the value of owning land. What lesson? Barring some unfortunate events, it’s the only thing that will always be here.

You can still make money in real estate speculation. For all the talk of keeping immigrants out, and telling people who don’t believe like the President does that they should leave it, America is still overwhelming undeveloped. With bans on abortion and abortion pills around the corner, even if we do manage to keep the immigrants down in Mexico, there’s still going to be an increase in population. Those people need real estate on which to live and on which to sell you things you don’t need.

So how can you go about making money in real estate speculation? Here are a few suggestions that have worked well in the past.

Although the most risky technique, this can also provide the biggest payoff. The risks range from the possibility of the land dropping in value to the fact that you can’t get any tax benefits from it. And, of course, undeveloped land won’t provide you the income that developed land can. On the other hand, who hasn’t driven past a booming neighborhood and heard their grandparents say something along the lines of “I had the chance to buy that at two dollars an acre, but I just didn’t have the money back then.” If you live near a big city and can get any kind of a good deal on land adjacent to it, then by all means do it; there’s no better gamble to take when it comes to real estate speculation. For that matter, this kind of speculation even makes sense in small towns; it wasn’t too long ago that many overcrowded, over franchised suburban areas used to be relatively isolated small towns. Heck, some of the most expensive real estate in the Atlanta area, for instance, didn’t even have a single Walmart as recently as twenty years ago. Now those same rural areas that used to be dominated by long expanses of literally nothing are indistinguishable from any area inside the actual city limits.

But real estate speculation of this type doesn’t mean you can just drive out somewhere, stop your car and hit on a goldmine. Don’t choose just any parcel of land. Do your homework. Look over the town, city or county planning and zoning records to determine where the infrastructure is headed. If plans are already in place to lay down a four-lane highway somewhere where’s nothing now, that might be a good place to speculate on. Determine where commercial development and residential development will be the densest in ten to fifteen years and shop accordingly. If you’re young enough and willing to wait it out, plan ahead for twenty, thirty or even forty years. What you think is ridiculously expensive for an overgrown piece of forest right now may one day look as cheap as that two dollars an acre your grandfather passed over fifty years ago. Undeveloped land is also a terrific investment gift to pass on to your children or grandchildren; real estate speculation doesn’t have to focus on your own bank account. In that way, you can try looking longer into the future and significantly increase your chances of finding something really cheap.

Property is often sold for the price of the delinquent taxes owed; or auctioned off to the highest bidder. This kind of real estate speculation can present a real opportunity for making money, but you have to be careful. You really have to do your homework before attending one of these public sales. The most painful pitfall may be finding out that the tax bill is greater than the actual value of the property. In addition, unless you’ve researched it, your dreams of becoming a real estate mogul ala Donald Trump may come wind up leaving you with nothing but blueprints inside your head unless you make sure the site has been zoned for business or residential construction first. In addition, it is wise to consult your particular state and local laws regarding the rights that a previous owner has to property that has been seized from him. In many cases, he may still have the right to reclaim his property which can result in all kinds of legal entanglements. When bidding at an auction, make sure you’ve kept your intentions on the property to yourself. Don’t do anything to invite an unnecessary bidding war. Remember, real estate speculation is a big game for those with lots of money.

If you notice a McDonald’s popping up in an unexpected place, take notice. McDonald’s hasn’t been able to sell billions and billions of hamburgers by building their restaurants where the kids ain’t. Neither have the managed to make billons and billions of dollars in profit by buying the most expensive property in town. Same thing goes for any other huge and profitable brand name consumer company, whether they be Subway, Holiday Inn, or Target. Although it’s probably too late to cash in on bargain prices by the time you actually see one of these companies’ instantly identifiable building, if you spend a little time looking through the public records you may get lucky enough to come across evidence of their own brand of real estate speculation. If you can get even luckier and come across the record of a franchise investing in a relatively undeveloped area that is the equivalent of striking gold. Think about how often you’ve seen a Burger King or Pizza Hut in the middle of nowhere. Unless you’re talking a strictly rural area, most often by the time the franchise goes up, there’s already been some residential growth. Well, think about it: You don’t make profit by buying land after it’s already quadrupled in value, right? These big boys spend huge amounts of money conducting research into which underdeveloped areas are likely to grow and where they can find the best deal for land before the growth starts. What’s more, you can also rest assured in the knowledge that they very rarely get their real estate speculation wrong. You want evidence: Franchises almost never sell off unused property at a loss. Take advantage of their resources and you may just find yourself benefiting by making money in real estate speculation.

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