Land is an indestructible asset that cannot be recreated. The earth is not getting bigger. It is my opinion that investing in land is the best way to create cash flow, earn passive income, and increase net worth.
The best way to do this is to operate a land business. Alternatively, you can invest with someone like myself who already has that business in place by purchasing land notes at ~30% yield. This is what I’ve been working with investors on over the past several years. I’ve been able to help them invest in land without running a full scale real estate business which can be time consuming, stressful, and too risky for some people. I love it but it is not for everyone, and investors can struggle finding great land deals.
The goal in purchasing a land note is to have it be a win-win for both the note seller and the investor. As the note seller, I select high performing land notes that qualify for sale from my inventory. These have what I deem to be good payers and are backed by land that was sold at or under market value. This way the land can be resold if the high quality payer does stop paying. The annual return rate for the investor is set to ~30% depending on the deal, and the cash required to purchase the note is then calculated. The land is assigned to the investor with the performing payer attached, and the investor starts collecting monthly payments directly from the payer. Should the payments stop, the investor is responsible for reselling the land at their own discretion. The investor becomes the landowner upon the note sale, cashing out myself as the business owner who found the land, bought it with free and clear title, marketed and sold it, took the risk to prove its value, and found a good payer. This is not a fund or holding company situation but an actual purchase of my cash flowing asset.
A good example is a 10 year note of $43,063 at 7 interest paying $500 per month. Notes can be bought at various points of maturity, but for this example we will assume it is bought right out of the gate. In this scenario, the yield would be set to 30% and the investor would pay $18,966 for the note. They would start receiving $500 per month from the payer for 120 months. The investor would assume my position as the land owner and have the land as collateral.
$550/MONTH LAND NOTE FOR $20,714
10 Acre of West Texas land with 115 months remaining on the land note. The note is paying $550 per month from a high performing payer with zero missed payments. At 30% yield to the investor the payer would be turned over for $20,714. The land is located near Lubbock, TX.