Transcription
So why is it that more people are buying raw land in the United States than ever before? The answer will surprise you. And look, it's not just the rich and the wealthy, although they're snatching up a lot of property right now. It's the average person, just like you and I, that are diversifying their financial portfolio. Perhaps they have concerns of their other assets making a stable rate of return in the coming years.
But that said, it's hard not to notice the likes of Bill Gates, Jeff Bezos, and Ted Turner, to name a few of the big names that people know that are investing in land. And these guys, just those three alone, have millions of acres of land. So, leading the pack of that is Ted Turner. No relation to me, nothing I'm aware of. He owns CNN, by the way, and also TBN, Turner Broadcasting Network. The next one is Jeff Bezos. Jeff Bezos owns close to half a million acres. And then Bill Gates, he owns a lot of farmland, close to 300,000 acres.
So, what does that mean for you? Well, first of all, they're not making any more land. What's here is pretty much here. And land's right there next to gold and silver, which happened to be at the peak of their value right now. And there's one more thing that's also at the peak of its value, and that's real estate.
But why is it that the wealthy are buying so much land? For one, we must consider profitability. They're not making any more land. And as population grows and people need food and groceries and all that sort of thing, land can be used for lots of different things. They're not making any more land, so why not invest in land, something that goes up in value? Very similar to gold and silver. It's also really important to know all of the things that land can be used for: timber, ranching, farming, grazing, and mining.
However, there is a new use for land. A lot of people are buying property, buying land. It can be as small as five acres, and they're actually doing what they call a Land BNB, an Airbnb based on land. So, here's what you do. You buy a five-acre tract of land and you post it that people can actually go camp out on your land. See, a lot of people like to do just what they call backpackers packing backpacking, where they physically just go, they jump in their truck, they go to a tract of land with a tent, and they just camp out. It's almost like just going to a private camp for two or three days on someone else's property. Yes, it's true, people will rent your place for a day just to get away.
But look, it's important to know that land is not like the stock market. It is not traded on the stock market. And it's really, the stock market has no effect on land. Land is in a financial class all by itself. So, when stocks and bonds and mutual funds and all that go up and down, land itself is pretty stable. Now, inflation is high, right? And treasury bonds are some of the safest you can invest your money in, but they're only yielding 2.4 percent, and they can't keep up with inflation. Perhaps that's why more fund managers are diversifying theirs and others portfolios and into raw land.
So, here's a question for you. Do you own raw land? Have you ever bought land? Have you sold land? Have you made a profit with land? Would you consider buying raw land? I mean, I know dudes, we like to hunt, we like to fish, we like to get out in the outdoors. And maybe if it's just a few acres, five or six here and there, there's something about trekking through the woods and walking through where it's quiet and peaceful, when no one can bother you, no one can tell you what to do. It's just your little piece of Earth.
Now, as I mentioned, fund managers are advising people to diversify their financial portfolio into land. Now, fund managers are not the same as property managers. Fund managers, what they're dealing with are the assets and the risk allocation when it comes to diversifying a person's portfolio. And it's not just raw land, it's commercial land, residential land. But they're showing people that you can actually invest in real estate and actually come out pretty good, and not just pretty good, real good. Most land right now is earning people around 10 percent a year on their investment. Land can be a really good investment.
But unfortunately, there's a dark side. You see, when you buy raw land, it's not making you any money. There's no passive income, there's no mailbox money, as they call it. There's no checks coming in. You just took your money and bought a piece of Earth. However, the good news is, you just bought a piece of land. You can do anything with it. You can grow stuff on it, you can sell stuff on it, you can do anything you want to with it. So, this brings me back to farming, ranching, timbering, mining, among a few things. And of course, you also can't forget about short and long-term rentals of just the land. And of course, there's also wind farms and solar farms that you can actually create on your property to generate electricity.
Now, when it comes to land, you can't forget about the absolute most important resource, and that is water. So, a lot of people watching this video probably aren't aware that there's a water table under our Earth. And fun fact, when they found oil, they actually were not digging for oil, they were digging for water and found this crazy black substance. So, look, why not dig a well and bottle water? Last year alone, there were 15.3 billion gallons of water sold just through bottled water. The average cost of a bottle of water is a dollar and fifty cents. That's a 20-ounce bottle of water. So, when you have a 128-ounce gallon of water, there's six and a half 20-ounce bottles per gallon. That means that a gallon of water is actually $9.60 a gallon. Yeah. So, you're probably like me, you just discovered it. Wow, a gallon of water is twice as much than a gallon of gas.
So, what are the rich doing with their land? What is Bill Gates and Jeff Bezos and Ted Turner doing with the property that they own? So, with Bill, it's farmland, and he actually farms vegetables. He farms potatoes, which are then sold to the McDonald's corporation to make those good old French fries. Bezos' land is farmland as well, but he also has 165,000 acres in Texas that he uses to test rockets. Now, it's interesting to know that these guys aren't really farmers. They actually lease the land to farmers. And here's the reason why: 39 percent of the 931 million acres of farmland farmed in the United States is farmed by farmers who lease their land. That's right, these farmers don't own the land they farm on.
Now, Bezos and Bill, they own less than a million acres between them. But here's a little fun fact that you know, that 30 million acres of United States land is owned by foreign investors. That's the size of the state of Pennsylvania. Now, if you're wondering how much land that is, that's only two percent of the farmland in the United States. That's right, 30 million acres is just two percent of the land in the United States. Now, that said, there are government restrictions on where foreign investors can buy land and how much land they can hold.
So, as the amount of U.S. farmland decreases each year, the opposite can be said for the world's population. You see, farmers can sell their crops to anybody, whoever they want to, anywhere in the world. So, what would stop the farmers in the United States from selling their crops to say, another country, and then have that country sell their crops that they purchase from them back to us?
Now, the average cost of an acre of land in the United States runs about $12,000. But that really just depends, because if you've got a smaller tract of land, say one, two, three, 12, 15, 30 acres, it may run you anywhere from $12 to $15,000 an acre. However, when you start purchasing acreage in the hundreds, if not thousands, of tracts at a time, that price goes down. That price goes down between $3,500 and $4,500 per acre.
Now, as I've always said and I tell everyone, real estate is hyper-local. You're going to have higher building costs, higher land costs, higher everything in certain parts of the United States than in others. So, an acre of land is 43,560 square feet. And to put that into perspective, so you can compare that to a football field is 57,600 square feet. So, a football field is one and one-third acre of land.
Now, if you're considering buying land, it's important to know there are some tax benefits to it. You can actually deduct the interest that you pay to a bank or mortgage company for loaning you the money to purchase the land. Now, I'm no CPA, but that's called investment interest, and you're able to itemize that on your taxes to deduct that as a personal expense.
So, regardless of how you use the land, the most consistent and stable way to the land's value is the land itself. Simply holding the land while others proceed to acquire it increases the demand for property, which increases the value. Perhaps we're seeing another rush on land right here in the United States.
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