The Cheapest Land in Texas
About twelve years ago, during 2005, before the real estate market collapsed, we were offered thousands of acres of land in Texas for US$50 per acre. We wanted to buy it, simply because it was the cheapest land in Texas. We negotiated the price down to US$15 per acre and started to put the deal in place.
Great Deal Goes South
Everything was moving forward, albeit slowly, to close the deal. We put a huge cash deposit with the bank that was offering the financing and we put up significant collateral of other properties we own to secure the deal.
Everything was going fine and then there was the financial collapse of the real estate market caused by the Wall Street investment bankers who over-leveraged trading in mortgage-backed securities that were made up of huge portions of sub-prime loans from unqualified borrowers.
Bankruptcy
Right before the escrow closing date, our loan was canceled by the bank in 2006. Our deposit money was tied up in a bank account at that bank in a frozen assets lockdown. And then came the bankruptcy, not of us, but the bankruptcy of the bank. We lost the deal and we lost our deposit money.
Why was the land so cheap?
This was the worst land possible. It was in the desert. It had no water. Previous attempts to drill wells for water had all failed. It had no connections to any utilities and the nearest link was many miles away. That did not bother us so much because we wanted to build a massive solar array to collect power.
The real problem was that the land was right on the border between Texas and Mexico. Every night, it was like a war zone. Thousands of illegal immigrants would pass through this land each night and the U.S. Border Patrol would try to catch them and send them back to Mexico.
Many that evaded capture by the U.S. Border Patrol got lost and died from dehydration in the desert. It was easy to find them then because the buzzards would circle and fly over the dead bodies. This was very sad and our plan was to offer water to anyone who passed by and needed it, without regard to legal immigration status.
What is the opportunity now?
If you believe that President Trump will build a wall on the border between the United States and Mexico, then there will need to be support services for the gigantic construction crews required to complete this project. This means that suddenly this “worthless” land has a new demand for its use.
We already bought as much of this land that we wanted a few years ago and we paid all cash that time. Our parcels are not for sale at this moment. We expect that part of our land that is directly on the border will be taken from us in eminent domain proceedings (to understand eminent domain, please see our other post). If this happens we should at least get some of the money back and perhaps make some profit. The real money will come from providing the support services in the nearby area if the Great American Wall is actually built.
Summary
This is a wonderful example of how the worst land in Texas, can suddenly have unexpected value. Investors, who invest in raw land, always hope some crazy thing like this happens. Lots of money is lost in this type of speculation. Wonderful success does happen occasionally, even if you are so “stupid” to buy the cheapest land in Texas.
Other parcels of this type of land are available for sale right now; however at elevated prices. Let us know at acressolutions.com if you want some of this raw land and we will go hunt for you IF you have the cash on hand needed to buy it because financing this type of land is still problematic.