Land is purchased with cash. There are no monthly mortgage payments. Obviously there are limits to your ability to leverage and purchase larger assets. This is not an advantage or disadvantage. However by purchasing property all cash you are forced to remain far more disciplined and rewarded with a wholly owned property. With land, you “cry” once (when buying with cash) but with mortgaged property you cry every month. Given these two scenarios, it is much wiser to only cry once than monthly. Additionally, you never have to worry about drowning in the transaction costs associated with house purchases.

Another great benefit of land is that it can be matched along with how much cash you have to invest. If you have $100,000 you can find a parcel of land for that amount. If you’d like, you can split those funds into two installments at $50,000 each or four installments at $25,000 each. Let’s say you only have $25,000, you can only buy $12,000 each. If you only have $5,000, you can still buy a parcel and grow your portfolio

If you follow this strategy, you have two options to grow your portfolio:

1) You can sell the $5,000 item later for $9,500. And if you then buy a $9,500 asset and keep repeating the process until you have a large asset portfolio that started with a single $5,000 asset. Wait and see when the next recession happens, your funds won’t go to zero. The value of the land does not reach zero. It may go down in the recession 10% to 20% but it will go back up in value. Your money base will never be at risk of complete evaporation.

2) You may be routinely allocating $5,000 to purchases of parcels of land. Every month, 3 months, or 6 months, keeping adding to your portfolio in whatever amount of dollars you have. And grow your portfolio in this way. Realize that the combination of these two strategies can be done simultaneously and grow your portfolio very quickly.

Land has been the investment of choice since the first human civilizations have been around. This means that in one form or another land ownership has been around for more than 10,000 years. Compare this to Wall Street which has been around for only 100 years. And the options market has been around for merely 50 years. With this type of age, it is very clear to see which has been the best investment since time immemorial.

Compared to land, the other investment classes don’t even register in the long-term time horizons. Land investing goes back in time thousands of generations. Corporate shares go back 3 generations and options are younger than most people today. This is the equivalent of comparing the latest fashion trend.

Some fear the negative of land investment such as lack of cashflow. This is because they confuse cashflow with investment. Cashflow is additional income (which required lots of baby sitting) and investments are there to grow your portfolio capital. In land investments, there are no monthly payments and there are no property taxes or HOA (Home Owner Association) fees to pay. If you buy in areas that are still being developed, the carrying costs are minimal. For example, if your annual taxes are $300, this is $25 a month or less than a dollar a day.

Compare this with the carrying costs of a house. If you buy an all-cash house, you still have to pay many other expenses that are greater than $25. And most people cannot pay the $500,000 minimum required to buy a house with cash. The net effect is that they end up with a mortgage or never buy anything in the asset class. Another argument we hear from the uninformed is that houses grow in appreciation faster. This is only true on the surface. There is an old adage that goes “a rising tide lifts all boats”.