In today's chaotic economy, whether it's verbalized or not, a main topic on investors' minds is: "Where can I find a legitimate high yield investment without a lot of risk to my principal?" Is this a fairy tale now or can investors still find good safe investments that earn solid returns? This series of articles provides answers to these questions.
In Part One of this series (see my blog below dated 2-27-09), we focused on "WHY" investors should consider buying investment property in the form of raw land development projects and "WHAT" makes them legitimate high yield investments. In Part Two (see my blog below dated 3-13-09), we explained "WHERE" to invest in investment property.
Today, in PART 3 of this series, we will focus on:
Step-By-Step
"What are best high yield safe investments"
STEP TWO: Once raw, undeveloped land is identified in the path of growth, the Land Developer will negotiate favorable terms for acquiring the property. There are a number of ways that land developers acquire property, the two most common are:
b) Obtaining an 'Option To Purchase' agreement: the land developer obtains the rights to buy the raw land by a set date at a set price by offering a non-refundable deposit.
NOTE: Investors are typically sought at this stage to help fund the acquisition of the property and cover costs associated with Steps Three - Five. These are typically 'silent' partners in the raw land development project.
STEP FOUR: The proposed plans are submitted to the city, county, state and federal governments for necessary approvals. This is known as "The Entitlement Process" and involves all of the critical sign-offs and approvals required for the newly proposed use of the property.
NOTE: In this step, the Land Developer literally 'creates' value and this is why raw land development can be so profitable. It is this entitlement process that creates an average 300-500% increase in the value of raw land - often with limited associated costs for even higher profits!
The increased value of the newly "entitled land" results from several important factors:
C. Fully approved or 'entitled' land is ready for immediate construction, giving builders and contractors the benefits of accelerated cash flow and returns.
All of these factors help make raw land development projects among the safest high yield money investments available today.
STEP FIVE: After the raw land's value has been increased by the completion of the entitlement process and other improvements such as access to utilities, municipal water and sewer, roadways, etc., the newly 'entitled' property is sold to Building & Construction Contractors.
Result = average 300-500%+ increase in land value
the Raw Land Development Process ends.
Profits are realized and Investors are paid.
Finally, the Building Contractors take over.
About the author:
John Hanlin is an Independent Investment Consultant specializing in low risk investments and retirement portfolio planning. He is a seasoned investor of over 25 years. Mr. Hanlin is the owner and contributing author of the website: www.JohnHanlin.com which provides detailed information about raw land development investments and free independent financial advice for retirement.
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