Buying and owning tracts of low priced rural acreage located in the United States could very well offer one of the surest and safest assets available today. This approach is based on the "KISS" rule (Keep It Simple Stupid) as opposed to complex strategies relying on multiple assumptions and dozens of moving parts!
Following are four simple facts that support the ownership of low priced rural acreage.
- PRICE. The old adage that the most important rule in real estate is "location, location, location" actually might not be as critical as "price, price, price!" Land located next to a city can be a financial "bust" if not aided by uncertain factors such as zoning, direction of growth, politics and the economy. Conversely low priced rural acreage located in the "boondocks" historically increases in value due to inflation and population increases alone! In the most basic analysis "location" is always subjective while "price" is an absolute!
- INFLATION. Inflation alone can beneficially impact the value of low priced rural acreage. Over the past five decades postage stamps have increased from $0.04 to $0.41 cents; gasoline from $0.24 cents to $3.30 per gallon; newspapers from $0.05 to $0.50; new homes from $12,000 to $180,000; the minimum wage from $1.00 to around $6.00 per hour and new cars from $2,000 to over $20,000. These price increases mean that the purchasing power of $1.00 in 1958 has decreased to less than $0.20 today!
- POPULATION INCREASE. The population explosion alone creates an ever-increasing demand for the same finite supply of land. In 2006 the United States population hit 300 million people and is projected to expand to almost 400 million people by 2050. Thus in less than 44 years there will be another 100 million people yet not one acre of new land will have been created!
- COMPARED TO STOCKS. Unlike the stock market raw land never "goes out of business" and can't be outdated by new technology. Many excellent stocks of fifty years ago simply don't exist today. However, land that might have been over-priced fifty years ago is still here and is probably an absolute bargain today based on the original "over-priced" value. If purchased cheap enough, and held long enough, history proves that it is practically impossible to actually lose money owning low priced rural acreage!