Rural property, like land, is defined as property located in unincorporated areas with a population density of fewer than 1000 people per square mile. These are often parcels of land well outside the main city, often called desert squares or just unimproved grass land. We have seen a lot of people respond to instagram or facebook ads calling these worthless, why would anyone live there! Boy are they wrong.
I have to chuckle at these comments because that is such a basic way of thinking when it comes to investing. Of course everyone goes for the typical city home to rent out when they think of real estate investing. The thing is, not everyone has hundreds of thousands of dollars to do that, nor do they want to take on a massive mortgage in this market. Well, that's good for us, because there's a little secret in the real estate game and that's rural land investing.
The Time Game Pays Off
There is a famous Will Rogers quote "Don't Wait To Buy Real Estate, Buy Real Estate and Wait". It's simple and obvious but it's not uncommon for people to only focus on fast money. Warren Buffet, a famous stock market investor has never spoke highly of people who "gamble" in the stock market. He places his bets in the market for long term investments, the day to day market swings mean nothing to him. On average, his method has done way better than people who wanted fast cash. Overtime he accumulated massive returns for his patient investors. The same theory works with real estate, especially land, rural land. It's very low cost and has very high potential returns.
Buy and Wait
The below example is Las Vegas Nevada, obviously Las Vegas is a very popular area that had exponential growth over the years. But let's look at how some rural properties way outside the city changed over the years. Rural desert land is very cheap typically, those are the ones we often hear comments about saying why would anyone buy those. Well here's why...
What you are seeing above is an example of those who played a smart game. They saw potential in Las Vegas enough to buy plots of land that were barren desert. Some people thought they were nuts back in the 80's to just buy something way out where no one was building or living. Parcels way out in the circular area above didn't even have roads back then, they were cheap and even way cheaper back before 1987. Some people getting large parcels of land for under $5,000. Big enough to parcel them out later on for even more return on investment.
Fast forward to the year 2020, which is just a little over 30 years. With long term vision, you wouldn't have made a return for quite a while, but the return on investment potential was absolutely massive long term. Also a lot cheaper, parcels were going for under $5,000 here, you could have bought 3 or 4 of them for less than a new car which would almost be worthless now at this time. If you have children or someone to pass it down to, holding these parcels gave your family financial freedom down the line. Or for some people who bought young, a great retirement.
The above picture from Zillow is the exact same area where all those cheap vacant lots where. There is very little land left in this zone, before that's all there was. We could only find 3 parcels of land for sale here, the rest are homes and businesses. These small parcels on Zillow going for $275k are only 0.47 acres, which is uncommon when buying rural desert property, this is because it was once a 2 acre property. Looking at the history of these parcels, they own 4 of them at this size, the owner parceled them out and now has 4 smaller parcels. This can be a very smart strategy for extra return on investment and the ability to keep a couple for yourself.
Can you see the Value Now?
Land, especially rural land is super cheap, it's probably the cheapest way to get started in real estate. We have sold tons of desert properties to our customers under $5k, a lot of them near the Laughlin NV and in Apache County. Is it possible we see the same thing 30 years from now over there? Time will tell, nothing is a guarantee in life, but the above example certainly worked out for those who invested way outside of Vegas.
From doing the math, those $275k properties were purchased for roughly $14k each close to 1987, even less before that. The owner now has an easy $1.1 million dollars in land at this point. Not bad for some dirt! The best part is, she didn't have to lift a finger, just pay the annual property tax. Talk about easy money!
On Top of That, Tech Is Making Rural Land More Valuable
One of the biggest shortfalls rural land had back in the day is the lack of living standards. There is a reason we all flock together in the city, we need food, communication, work, water and more. The city has it all whereas rural land was really hard to live on back then. Well times have drastically changed when it comes to rural living comfort. Let's look at some advancements that allow for living rurally better...
Satellite Internet & TV - High Speed Internet and TV are available everywhere
Phone - Cellular networks allow you to keep in touch with everyone
Remote Work - More people now than ever work from home now
Water Delivery - If you don't want to put in a well, almost all places have water delivery now to fill up your tanks
Amazon - Get anything you need or want, amazon drone service coming soon to remote areas but currently you can just use a local drop location
Advancements in Solar - Solar is getting to the point where you can fully live off grid with power, generators are more efficient as well.
If you have $20k or less to invest, you can live mortgage free with almost all the accommodations of the city. You can buy land in remote areas and own it 100% free and clear with a small investment. Grow your own food, build your home, live in an RV and work from home. We didn't have a lot of these options back in the 80's, more and more people are choosing to live remote and in rural areas. There has been quite a spike in the popularity of rural land lately. Even many TV shows and influencers are showcasing their off grid lifestyle.
Nothing is guaranteed in life, some rural land won't have the attractive return long term. Las Vegas obviously is a unique desert area that really blew up on the map. However, there are millions of examples of this same story all over the United States. This article isn't any type of financial advice or how you should expect every rural property to turn into a million dollars. But I wouldn't discount these properties as worthless, it has a great entry price for real estate investing and the possibility of highest return on investment. Not everyone sees this strategy at this point, in fact very few, but that's the best time to enter.