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BATTLECALL GUEST EXPERT: Robert J. Abalos, Esq., InvestingInLand.com
At the outset let me say that as a practicing real estate attorney and investor I have visited many European, Asian, African, and Latin American countries. I lived in London for nearly a year in the 1990s, visited Hamburg, Germany to work with a friend on a development project, was employed by a large investment banking firm on real estate financing issues who sent me to Seoul, South Korea and Johannesburg, South Africa, and I've vacationed in places ranging from Panama and Brazil to Turkey and Egypt.
There are incredible opportunities for land investors in virtually every country around the globe for the simple reason that QUALITY land is very scarce no matter where you are. What do I mean by "quality" land?
All quality land meets three criteria:
- Geological practicality
- Prime location
- Available government permission
Land after all is really a piece of the Earth.
The property you buy must be geologically sound for its highest and best economic value. Oceanfront land in Hawaii is great, but not if the land is lava rock on the side of a volcano. Riverfront property is prime, but not land on a floodplain or that is three feet underwater every Spring when the winter snows melt. Land that is filled with clay soil is not good farmland, nor does the soil perc well for septic systems. Land which is primarily bedrock makes basement or below-grade construction ridiculously expensive. So the geological properties of land must be consistent with your intended use, hopefully the best and highest (and most profitable!) use for the land.
Your land must be in the right location to maximize value.
You may have an ideal piece of land complete with the right geology and all the right government permits and approvals but if your land does not have the right location for the intended use, your land has little value. What defines location? Traffic patterns, demographic growth, retail competition, necessity, consumer demand, esthetic appeal, and many more factors. You may own a great piece of land with perfect geology that would easily support a project the size of a Wal-Mart Super Store. But if your land is on a gravel road nine miles from the nearest highway, your idea will not work. A housing development in the flight path of a major airport is a tough sell. Or luxury houses near a meatpacking plant. Zoning laws give guidelines for development but the actual decision to build rests with the owners of the land and many, many unprofitable projects have been approved by local politicians.
Without government approval for your projects, little else matters.
You might have the perfect land and perfect location but if you cannot get the local public authorities to approve the best use for your land, your development or anyone who would like to buy your land for that form of development has been instantly crippled. Some local governments are "pro-growth" and some zealously "anti-growth" but all regulate what gets built in their communities in dozens of ways, including:
* Building permits and inspections.
* Traffic reviews.
* Sign, billboard, and marquee approvals.
* Curb cuts.
* Fronting road and highway access.
* Fire protection of patrons.
* Parking limits and minimum lot sizes.
* Traffic lights and road signs.
* Police patrols and security requirements.
* Health inspections for food, pests, rodents.
* Zoning approval and waivers.
* Tax collection issues.
* Employment impact evaluations.
* Highway exit and entrance ramps to your project.
* Garbage disposal.
* Population density requirements.
* Environmental impact statements.
* Water drainage and flood control.
* Project lighting requirements.
* Water and sewer hookups.
* Community impact statements and much more.
The list could go on and on. My point here is that government approval is VALUABLE and when you can get it for your land, your property has just grown substantially in value, often by hundreds of percent.
How does all this rate to international investing?
Simple.
Quality is land is scarce EVERYWHERE.
No matter where you live, there is only so much "quality" land available. Land with the proper geology, location, and government approval for development (however you define the term, everything from building a subdivision of townhouses or a new Home Depot to a single family home on a lake or a new playground near your child's school) is always in short supply. The amount of this land is finite and SHRINKING due to development already underway, tougher government standards on zoning and environmental issues, and increasing public participation in the development process. Just try to get a new Wal-Mart built now as opposed to twenty years ago and you'll understand what I mean.
Developers and land owners in the United States complain they have it tough getting their projects approved but they haven't seen anything like our developer friends in Europe, Asia, or South America must endure. I'm told it takes five years or more to get a water and sewer hookup for new construction in Brazil. Or that construction projects in London and Rome must get historical antiquity approval to assure no one is building on the site of an ancient Roman bath or medieval fort. And in places (like Tokyo) all development of some kinds is permanently frozen! You may own great land for housing but despite a shortage of affordable living space, you just can't build any! And real estate investors in America complain about rent control laws!
All this simply illustrates one point. No matter where you are, if you own quality land (as defined above) or can buy some you are sitting on huge potential profits. The same techniques can be used to find, evaluate, improve, buy, sell, subdivide, lease, and develop that land no matter where you are. Quality land is everywhere but quality land is inherently contextual, defined by your local country, county, city, borough, township, and municipal area. What is quality in one county may not be in the next due to an unfriendly anti-growth government, different soil conditions, the course of a river, access to an interstate highway, or some other very local factors. But understanding what gives land value, what makes land high quality, and how to maximize the value of your quality land is universal. The same rules apply in Philadelphia, Pennsylvania and Philadelphia, Egypt.
Have I ever bought a piece of land outside the United States?
No. I'll tell you why.
As I explain, land investing is a local skill. You need to know not just the value of land in your area to get great deals but the people, companies, politicians, and players who add value to your land and give it real attributes of quality. I rarely invest in land outside the state I live in (Virginia, in the United States) because I'm not very familiar with the land values outside the area I live in and travel frequently through. I virtually know every piece of land in my county and when one sells I can instantly tell if the price was too high or too low. I can't do that in Maryland, California, or on vacation trips to Mexico.
I believe there is money to be made with land in virtually every country on Earth, including Communist countries that will not even allow you to directly own land! But those profits should ideally be earned by the residents of those countries, especially by the people who live in each and every province, city, and village. ANYONE can find quality land to own within a one hour drive of their home. ANYONE! You do not need to travel to the other side of the world in order to find some. You operate at a major disadvantage against the local residents who intimately know the area when you attempt to do just that. Of course, partnerships are perfect in such situations. The local partner with knowledge of land values in a town or village, the capital partner with money, what a team they could make together! Anyone with partnership ideas for some development land near London, England please contact me. Let's talk!
To sum it all up----
You can make money with land no matter where you live.
Just make your money with land that is near where you live. |
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