Why Rich People Buy Raw Land

Summary

The script discusses the increasing trend of raw land purchases in the U.S., noting that it's not just the wealthy like Bill Gates and Jeff Bezos who are investing, but also the average person diversifying their portfolio. It highlights land as a stable investment akin to gold and silver, with potential uses ranging from farming to land-based Airbnb services. The script also touches on the profitability of land, tax benefits, and the importance of water resources, concluding with the idea that land value appreciates over time due to increasing demand.

Takeaways

• 📈 Land investment is gaining popularity in the U.S., with both the wealthy and average individuals diversifying their portfolios.
• 💰 Prominent figures like Bill Gates, Jeff Bezos, and Ted Turner are significant landowners, contributing to the trend.
• 🏞 Land is a finite resource, and its value is comparable to precious metals like gold and silver.
• 🌾 The land can be utilized for various purposes including farming, ranching, timber, grazing, and mining.
• 🏕 A new trend of 'land BNB' or land-based Airbnb allows people to rent out their land for camping and outdoor activities.
• 📊 Land is a stable investment, unaffected by stock market fluctuations and offering a hedge against inflation.
• 💼 Fund managers are advising clients to diversify into land for its profitability and long-term value retention.
• 🌱 The potential for land to generate income includes farming, leasing, and even establishing wind or solar farms.
• 💧 Water is a critical resource, and land with access to water can be particularly valuable for various uses.
• 🌍 Foreign investors own a significant portion of U.S. farmland, highlighting the global interest in land acquisition.
• 📐 The cost of land varies greatly depending on factors like location and size, with economies of scale for larger purchases.
• 🏦 There are tax benefits to owning land, such as deductions for the interest paid on loans used to purchase the land.

Q & A

Why are more people buying raw land in the United States?

People are buying raw land as a way to diversify their financial portfolio, possibly due to concerns about the stability of other assets in the future.

Which notable individuals are mentioned as significant landowners in the United States?

Bill Gates, Jeff Bezos, and Ted Turner are mentioned as significant landowners, with each owning millions of acres of land.

What is the significance of land as an investment compared to gold and silver?

Land, like gold and silver, is a finite resource that is not being produced anymore, making it a valuable long-term investment that can appreciate in value.

What are some alternative uses for land that are gaining popularity?

Alternative uses for land include land-based BNBs (short for 'Backpackers and Nomads B&B'), where people rent out their land for camping and other outdoor activities.

How does land investment differ from stock market investments?

Land is not traded on the stock market and is in a financial class of its own, making it relatively stable and unaffected by the fluctuations of stocks, bonds, and other financial markets.

What are some potential uses for land that can generate income?

Land can be used for timber, ranching, farming, grazing, and mining. It can also be rented out for short or long-term stays, or used to create wind and solar farms for electricity generation.

Why is water an important resource when considering land investment?

Water is a crucial resource, and access to water sources can significantly impact the value of land, especially for agricultural purposes.

What are some of the things that Bill Gates, Jeff Bezos, and Ted Turner are doing with their land?

Bill Gates uses his land for farming, including growing potatoes for McDonald's. Jeff Bezos has farmland and uses part of it to test rockets. Ted Turner's land use is not detailed in the script.

How much of U.S. farmland is owned by foreign investors?

About 30 million acres of U.S. farmland is owned by foreign investors, which is roughly 2% of the total U.S. farmland.

What are the average costs of an acre of land in the United States?

The average cost of an acre of land in the United States can range from $12,000 to $15,000, but this can vary greatly depending on the location and size of the land.

Are there any tax benefits associated with owning land?

Yes, there are tax benefits such as the ability to deduct the interest paid on loans used to purchase land, which can be itemized as an investment interest expense.