Chinese Buyers are Buying Real Estate Across American and Beyond

The New York Times recently reported that Chinese buyers have been buying luxury high end apartments in London wealthier neighborhoods in Vancouver Canada and luxury condos in New York City and larger home in the Silicon Valley. These buyers are buying higher end properties in major cities which doesn’t affect the overall real estate market, but it does in more dense populated areas like New York and San Francisco. This pushes residences in these cities to pay more for living space and pushes up rent. These Chinese purchases make up a small amount of the overall sales in the United States. This is a disproportion of their money in high end properties according to the NT Times. They have bought one in every fourteen homes in the $1million plus range in New York. They are also buying land in the Antelope Valley. There are real estate agencies and marketing firms promoting fee simple properties in the Antelope Valley. Land has no maintenance needs so the buyer can sit and wait and just pay the property taxes. Larger condo’s need maintenance, HOA fees and security. The Chinese government doesn’t allow long term ownership of property in China. It is usually for a period of years, so property can’t be passed on to children. Additionally, in China land has to be development. This is partly why there are ghost cities in China, since the land was bought but requires development in a period of time in order to retain the property. This is why land within the path of growth that can be pass onto offspring is so enticing. The Chinese stock market and government cannot be trusted to provide security in an investment. This new overseas investment is helping property values in Lancaster and Palmdale especially closer in property to development.

Land Banking with a California Land Contract

Land Banking is a term used by land investors. It essentially means to buy land and hold it for a period of time for a long term gain. It is the same as holding a stock or security for a long period of time. Simply buy land, hold and wait to see what future growth patterns do to its market value.
A land contract is a simple contract between a buyer and seller to purchase real property. It doesn’t even have to be land. It can also be known as an installment sale agreement. It is an agreement between a seller and buyer whereby the seller provides financing to sell the property for an agreed purchase price and the buyer repays the loan in monthly installments. It is much like a typical mortgage agreement, but there isn’t a financial institution involved and there are only two parties in this transaction. Under a land contract, the seller retains the legal title to the property, yet allowing the buyer to take possession of it other than legal ownership. As an example, if a buyer pays $9,000 for a parcel with 10% down payment of $900 and then finances $8200 at 7% interest approximately $228.02 in installment payments a month over 3 years. The seller is providing a short term loan to the buyer. The seller holds legal title to the land until the loan is paid in full. After the full purchase price has been paid including interest, the seller will convey title to the property to the buyer, and record the deed with the recorder's office. If the buyer defaults on their installment payments then typically the land contract would consider this a failure to pay, and the buyer would be in breach of contract. In a failure to pay any equity earned by the buyer would return to the seller. The seller would retain all of the buyer’s payments and interest.
Land contracts are different than the typical real estate contracts, because in a land contract the seller is providing a loan to the buyer (short term seller financing). In a standard real estate contract, if there is a loan then the loan is handled by the third party lender who administers the payments after escrow closes. If a third party lender is involved then a lien (mortgage) or trust deed would be recorded on the property.
This is an easy way for a buyer to limit their risk in buying land if they don’t have the full cash amount in order to buy a property. It is also more cost effective and offers security to the seller as they will not have to foreclose on the property. We are offering land contracts on our smaller parcels, so it allows land buyers to invest in real estate with less capital and risk for tomorrow’s reward. We also think banking on your future with real estate still remains one of the best means to secure your retirement, or long term needs. With today’s low bank interest rates investing in land is a far better alternative.


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Why Los Angeles County Undeveloped Land is a Better Investment Vehicle Than the Stock Market

The Stock Market in 2010 has been rising, but the best long term secure investment may not be stocks in 2011. We feel land in general is a better long term investment than stocks. Stocks can be volatile and some stocks rise while others may go sideways or down. Most need an advisor to guide them in today’s equity markets, and with the global debt crisis their future value can be murky. Many analysts say the buy and hold strategy may be dead as short term trading is prominent in today’s stock markets. Land Banking and long and short term land investment has shown to be a more secure, patient, low risk and lucrative means for buy and hold investors. Investors can buy and forget about their investment for three to ten years as it grows. We focus on Los Angeles County land and undeveloped land in the Antelope Valley for several reasons. Mainly, the population growth in the county has increased from 4.1 million in 1950 to 9.6 million as of 1998. The US Census has projected that the population will increase to 12 million by 2025. The real estate prices have increased with this growth over the decades, but have recently returned to earth. In addition, land prices have also deflated with the real estate bubble. But real estate prices and land prices have potentially hit the bottom of the trough in the price curve. It is similar to buying stocks after a major sell off, since higher prices are most likely in the future. Land is at or near its bottom in this area as growth in the solar and wind industries has increased in the Antelope Valley recently. Solar and Wind Energy companies require large swaths of land for their facilities leaving less undeveloped land for homes. Home development is not on the increase currently, but once the population demands housing again then land prices will increase accordingly. Buying land now, especially pre-developed land at these lower prices has the potential to produce a much better return and lower risk investment then the stock market has in the past decade.

The past ten years the stock market has been referred to as the lost decade, since the market is trading right where it was nine years ago. Stocks, long touted as the best investment for the long term, have been one of the worst investments over the past nine years, and trounced even by lowly treasury bonds according to the WSJ(Aug. 2010). In an article from LandThink.com, Professor Jeremy Siegel of the University of Pennsylvania’s Wharton School indicated that stocks showed an average gain of seven percent a year when the data are controlled for inflation. This average works when looking at many stocks over many years. Some individual stocks may have increased more, but adjusted for inflation, a dollar invested in the S&P 500 in April 1999 produced no gain at the end of March 2008. The performance of big U.S. stocks amounts to an average annual rise of 1.3 percent during the past decade after dividends and inflation are counted in. (E.S. Browning, “Stocks Tarnished By ‘Lost Decade,’” Wall Street Journal, March 26, 2008.)

Yet, farm value in current dollars averaged $2,160 per acre nationwide on January 1, 2007, up from $974 in 1998, a 13.5 percent average annual gain according to the U.S. Department of Agriculture. Cropland during that period rose from $1,340 to $2,700; pasture rose from $489 to $1,160 (source Landthink.com)

An individual investor has to continually watch the stock market to ensure gains, or trust a financial planner to provide advice and expertise on the best stock investment. But undeveloped land is a much easier investment as it doesn’t require a financial advisor, maintenance, or exhaustive company research. Land is not exposed to flash crashes, insider trading, corporate public relation issues, or even Wikileaks. Land values slowly increase or decrease over time, so it is an ideal long term investment to literally bank on the future. It is the ideal buy and wait investment, so buying now at lower current prices may be your best retirement vehicle. Individuals simply can not make enough to retire by placing money in savings, or CD’s. You need to invest for your retirement, and we believe longer term land investment can provide you a secure future.

VacantLandDeals.com was formed to help investors find land investment opportunities at the low end of the market, and in the path of growth

Los Angeles County Lands Best Renewable Sustainable Project with a Patented Solar Complex built on Pre-Developed Industrial Land

Power Engineering magazine announced this past December the selection of E-Solar’s Sierra SunTower facility as the winner of "Best Renewable and Sustainable Project" at the 2009 Projects of the Year Awards. This is an annual award where Power Engineering magazine recognizes the world's best projects in the four major categories, gas-fired, coal-fired, nuclear and renewable. The new solar power facility is the first of its kind in California.

E-Solar unveiled Sierra SunTower, which is their 5 MW commercial-scale solar power plant, in August 2009. It is located just 60 miles north of downtown Los Angeles in Lancaster California. The solar complex runs along Avenue G in the northern part of the city. This renewable energy facility captures the suns energy to produce super-heated steam with an average operating temperature of 800°F at a pressure of 900 psi, which it delivers through a turbine generator to Southern California Edison. Their patented technology uses Pre-fabricated modular units that are scalable to fit smaller or larger parcels of land to suit their power client’s requirements. This project was developed on a small parcel of land close to existing transmission lines, and it is the first of several planned in Antelope Valley, California.

This is one part of the City of Lancaster’s 2030 General Plan to create fertile ground for renewable energy projects. The planning department has approved of thousands of additional acres of heavy and light industrial land as a target area for these types of projects. They plan to further expand this area by amending the zoning to absorb rural residential and agricultural zoned land for heavy industrial use. This would be the largest expansion of Los Angeles County land into city zoning in decades. It is also one of the best means for a land investor to get a rapid return on their investment.

It is paramount for land investors and land bankers to buy land near developing areas such as Lancaster and Palmdale California. The closer you are to development the more likely development will reach your parcel. In many cases the initial investment can be more, but the return on investment could be shorter term. We have spoken to vacant land owners who purchased remote desert land far from development and they are unfortunately still holding decades after their initial investment. Don’t let it happen to you, as the real estate slogan goes location, location, location also applies to pre-developed land.

Gold and California Vacant Land as an Investment Hedge against Inflation

Gold and precious metals have been and still are the best hedge against inflation. But you have to look at precious metals as a paper asset versus silver coins and gold bars. Initially, what is a hedge against inflation? An inflation hedge is an asset that loses little value in periods of rising prices. It therefore holds its value and purchasing power during an inflationary period. Investors expecting inflation will typically buy this asset type to hedge against rising prices. Precious metals will actually increase in value since they are such an ideal inflation hedge.
The best way to address this question is to look at real assets versus financial assets. Real assets have intrinsic value, which is value of their own. They have direct or indirect usefulness like cars, wheat, corn, gold, real estate, land, and even appliances etc. Financial assets are a claim of profit of a firm, family or government. They would be stocks, bonds, mortgages, trust funds and the likes. Generally, real assets like gold, vacant land, and other commodities are a better hedge against inflation. These real assets have a value of their own, and are not devalued when everything else is inflating in price. Ideal hedges should hold their value over time and not lose their value. Produce and cars lose value over time, while precious metals (gold, silver, palladium), and vacant land and even wine will hold its value.
Another key element of an inflation hedge is its marketability. Is there a market for the commodity at virtually any given time? There is a market for soybeans, heating oil, gold and land, but things like shoes, furniture, and stocks have a limited market, and re-sale market. Another feature of a good hedge is its divisibility. Essentially can the asset be broken down into smaller portions? A house, car and land can not be broken down, but gold, gas, and agricultural products can be.
The best hedge against inflation has been and will continue to be gold, but we are referring to the hard asset of coins, bars, and even a mine that you own. Holding gold in stocks, ETF’s, or shares in a gold or silver mine is a financial asset and not a good hedge. Real Estate like a rental house, apartment, or vacant land is a good hedge but not the best, since it is not as marketable and not divisible like gold and other commodities.
The problem is the availability of gold coins and bars and nobody but a farmer will hold perishable commodities like wheat, or corn in their back yard. We think vacant land is a good alternative as an inflation hedge for investors since it is inexpensive, available and it will hold its value until inflation ebbs. It also doesn’t need to be maintained, will not deteriorate, and it can’t be rustled or stolen.

City Of Lancaster to Annex 7000 Acres of Los Angeles County Land

Currently L A County owned land is the target area for the City of Lancaster. The seven thousand acres of land is situated north of the city limits of Lancaster. The new area would border from West to East Hwy 14 to 20th Street East and from South to North from Avenues G and H to Avenue E. Mayor Rex Parris indicated that the land within the current city limits are becoming more developed, so now is the opportunity to continue the city’s growth by incorporating new land into the city.

According to city staff at the city council meeting this past summer the annexation is a twofold benefit. Firstly, it will allow the city to better manage their Waste Management. Currently the landfill lies outside the city limits so this will enable the city to better manage their waste resources. The area will also allow space for current and future solar energy plants. This unincorporated area is mainly flat topography which creates uncontained rain water to be wasted. The proposal enables the city to improve drainage, prevent flooding, and collect the water for recyclable usage. It in turn creates solar energy production interests to work together within the city limits and offer solar and alternative energy solutions for Lancaster.

E-solar could be a main benefactor of the plan, since they require water resources to be heated by their panels, which then produces the electric power. It is a green win win solution since the city will be able to trap the currently uncontained water and provide alternative energy for residents. The city of Lancaster is currently planning a similar project called the Recycle Recharge Project at 60th Street at F in cooperation with E-Solar.
This project will recycle rainwater throughout the city and provide recycled water for E-Solar and residents while the remainder will be recharged through natural aquifers in the area.

The annexation process will need to get environmental impact approval, and then if the city council approves the project then the proposal goes to the County’s Local Agency Formation Commission (LAFCO). LAFCO will evaluate the proposal, review it with residents and decide if it is within the best interest of the area concerned. This process may take six to nine month’s.

The annexation is a major boost for land investors, since you can buy land now at lower prices and benefit with new zoning changes from county agriculture land to industrial and commercial zoning and development of the area. The opportunity provides inside information to get involved in a lower risk speculative land investment. We are taking advantage of the opportunity this annexation projects, and we urge savvy investors to do likewise.

The Solar Wind is Creating Green Energy Land Investment Opportunities in Los Angeles County

There has been much talk in the news media and the Obama Administration regarding cap and trade, and global warming solutions. You may ask where this green energy momentum will take root. Well we see some indications in California which has been leading the way in the US regarding going green. We have noticed there has been growing development in Antelope Valley with Wind and Solar technologies. E-solar has acquired $130 million in funding from Google.org and Oak Investment Partners and they have signed a power purchase agreement with Southern California Edison Power to build a 245 megawatts solar plant in the Antelope Valley region of Los Angeles County. There will be a series of fully operational plants which will begin production in 2011, and targeted operational by 2012 according to news sources. There have also been large purchases of land in several parts of the Antelope Valley by Solar energy companies over the past year. It is either an E-solar subsidiary or a solar competitor. In addition, Luz Solar Partners has a fully operational solar plant at Kramer Junction near Hwy 58 and Hwy 395 in San Bernardino County for several years now.

If you drive through Tehachapi, California in Northern Antelope Valley you will see many Wind Turbines taking advantage of the heavy winds through the grape vine and Antelope Valley. This area is slowly and quietly becoming fertile ground for green energy solutions. We spoke to a recent land buyer who purchased land in Kern County and a Wind Energy Company approached them within months to lease their land to install their turbine towers.

These are real time Land banking opportunities taking place right now in Lancaster and Palmdale California and the growth appears to be just beginning. Real Estate is at market lows, and the push for the nation and globe to go green is in its infancy. Many property owners purchase land in the Antelope Valley a number of years ago if not decades ago, and they are reaping rewards today. If this area continues to be ground zero for green energy technologies then the Land banking turnaround could be much shorter.

Land investment on the Right side of the Tracks

California voters approved a $9.95 Billion bond to build a high speed rail system from Sacramento to San Diego on the recent November ballot. It can take a passenger from San Francisco to Los Angles is 2 hours 38 minutes with an estimated cost of fifty five dollars, or Sacramento to Los Angeles in 2 hours 17 minutes for fifty three dollars. The recent bond approval by voters initially allows up to 1 billion for local and regional rail upgrades that will connect to the future High Speed Train System (www.cahighspeedrail.ca.gov). State Law requires that construction can’t begin until matching funds from outside sources are committed. In addition, it is estimated that the Federal Funding will provide $10 to $12 billion or 25 to 33 percent of the costs. This could be from the Passenger Rail Investment and Improvement Act passed by Congress in 2007. This can also be part of what President Elect Barak Obama’s administration has proposed as the “New Big Deal”. The California High Speed Rail Authority expects construction to begin by 2011. The incoming President, Congress, the California State Governor and Legislature and now state voters are all in approval, so there appears to be nothing to stop this train now other than the actual funds. With all these forces in approval it looks inevitable that the funds will be found by 2011. This will be one of the largest government projects over the next twelve years.

This yields investor opportunities in stocks affiliated with construction and real estate values near the future rail system. Many areas along the six hundred mile route currently have sparse populations and depend on the agricultural industry. One of the future rails stops is in Palmdale, California in Los Angeles County. This is an area with a population of over three hundred thousand and an abundance of available inexpensive land. It is an area that has shown considerable growth over the decades, and will grow with or without the rail system providing investment growth security for speculators. Lance Dorman of Vacantlanddeals.com said “Land investors need to be on the right side of the tracks when investing on the future”. This looks to be a ripe opportunity to buy land and wait, while land prices are currently low. Real estate land prices all over California have dropped from their recent highs in 2006, and prices will definitely rise over time.