Trading Land Like a Billionaire
The decision about the value of acquiring vacant land depends on a number of factors, which include:
• Location – Land out in the wilderness, in the middle of nowhere, has much less value and fewer alternative uses when compared to a vacant lot in downtown Houston, unless you discover oil deposits on it.
• Amenities – A lakefront lot or land with water running through it such as a small creek is more valuable that barren desert land. However, if the barren desert land has some hunting capabilities the value goes up. Even if the land used to be desert and, a small lot, located on a golf course in a master-planned community may have tremendous value when compared to a lot of a similar size located elsewhere.
• Potential of Buy and Hold – This takes foresight to see what type of development will be possible for the land in the future tat might make it more valuable.
• Rights – Mineral rights below the land, air rights above the land, and water rights on the land, are becoming more valuable depending on where the land is located. These rights sometimes sell along with the land parcel. In other cases, the seller holds back some rights or the rights may have been already sold separately.
Successful Land Trading by a Billionaire
To be a successful land trader requires understanding current market conditions and the ability to see the future progression of development.
The billionaire Howard Hughes made a great deal of his fortune because he had the presence of mind to foresee the development of the northwest segment of the Las Vegas Metropolitan Area.
Howard Hughes arrived in Las Vegas in 1966 for a vacation, never intending to stay. When they ask him to check out of the hotel because he stayed too long, he bought the Desert Inn hotel instead. Previously, during the 1950’s he traded 73,000 acres of land he owned in Northern Nevada with the Bureau of Land Management of the U.S. to obtain 40-square miles (approximately 25,600 acres) of land to the northwest of Las Vegas, which ultimately became Summerlin.
When Hughes acquired the land, nobody wanted that barren desert land. Howard Hughes must be laughing from his grave because the land became so valuable to use for residential housing tracts. Currently, when sold by ¼-acre lots for $250,000+ each, Summerlin land now sells for over $1,000,000 for an undeveloped acre.
Summerlin and Summerlin South in Las Vegas are now two of the most successful master-planned communities in the United States. These areas weathered the real estate balloon bust that started in 2008. Now, these areas in Las Vegas have once again become some of the most desirable areas in the Las Vegas Metropolitan Area.
Summary
Land traders become successful by being able to see the path of land development well in advance of when others can see it. Buying and selling mineral rights because of the potential of oil discovery in Texas is very popular. Opportunities still exist in land trading because of the continued expansion around the major metropolitan areas in Texas and elsewhere.