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Redevelopment Opportunities Abound

May 14, 2019 by Michael Bock Leave a Comment

Redevelopment Opportunities AboundHouses for a dollar. Millions (perhaps billions) in tax incentives. Reclaiming contaminated land. Partnering with Walmart to build town centers. What do all of these things have in common? They are examples of exciting redevelopment opportunities in different parts of America.

HUD Dollar Homes

The U.S. Department of Housing and Urban Development (HUD) offers homes for $1. Local governments may purchase them if they listed for sale without finding a buyer for six months. HUD acquired these homes through foreclosures.

The local governments purchase the homes for $1 so that they can fix them up and then re-sell them to low- to moderate-income families as part of a neighborhood revitalization program.

For investors and home buyers, there are also many bargain-priced HUD homes for sale, which need rehabilitation. First-responders and teachers get a 50% discount. Non-profits get a 30% discount.

Tax Incentives

Tax incentives attract investments by businesses in economically-disadvantaged areas. Federal, state, and local programs encourage redevelopment in many areas. Tax abatements come from the state, county, and the local community.

In 2018, the U.S. Treasury Department created Opportunity Zones in many states to give preferential tax treatment for investments made in these zones. Investors in these zones can defer federal income tax on capital gains. Under the new tax code, investments in Opportunity Zones held for 10 years have zero capital gains tax.

Super Fund Site Reuse

The Environmental Protection Agency (EPA) has a Superfund Redevelopment Initiative (SRI) to clean up toxic sites and reclaim contaminated land. There are now quite a few Superfund sites that went through the cleanup process and have EPA approval for reuse. Some successful projects under the SRI program include large solar energy collection arrays built on reclaimed land.

Walmart Parking Lots To Become Town Centers

Walmart plans to partner with developers to build Walmart Town Centers on underutilized acreage that surrounds some of its Walmart Super Centers.

Walmart invites small businesses and local communities to work with them on these redevelopment projects. Some plans include dog parks, day care centers, health clinics, farmer’s markets, basketball courts, and green spaces for picnics.

Sounds a bit like what downtown Main Street used to offer before Walmart came to town. Doesn’t it? Now, with these new redevelopment plans, the community space of a town center is coming back to some American towns.

Conclusion

Opportunities in redevelopment received support on a national level by the JOBS Act and the recent changes in the tax code. There are many redevelopment success stories happening in places where before everyone only saw problems and now real estate investors and developers find opportunities.

Whether you are in the market for a single family residence or a commercial investment, be sure to consult with your trusted mortgage professional to discuss financing options.

Real Estate Tagged: Investment Properties, Real Estate, Redevelopment

How to Become A Billionaire Land Trader

May 8, 2019 by Michael Bock Leave a Comment

How to Become A Billionaire Land TraderTrading land like a billionaire relies on three simple premises. The first one is to acquire the land for cheap. The second one is to never intend to sell it. The third one is, if you trade it, trade up.

Howard Hughes

Billionaires that start with an inheritance have an advantage. Howard Hughes was born into wealth. His father invented an oil drill that penetrated difficult, hard rock, which made Howard Hughes one of the richest men in the world from his inheritance.

Hughes visited Las Vegas during WWII for the first time. Then, in the 1950s, he traded some parcels of desert land that he owned in Northern Nevada for 40 square miles (26,500 acres) of federal land. This property, managed by the US Bureau of Land Management, was in the northwest of Las Vegas.

Hughes died on April 5, 1976. Well after his death, this land would later become the master-planned community of Summerlin. The first family moved into Summerlin during 1991.

Vacant lots in Summerlin now sell for an average of $2 million per acre. This makes the land Hughes originally acquired by a trade of land worth a few million, equal to about $53 billion today.

Billionaire Lessons

Howard Hughes was not exactly clever. He was just greedy and stubborn. He decided to make Las Vegas his home after he came for a party in 1966. He stayed at the Desert Inn in the penthouse. After ten days, when his reservation was over, the manager asked him to leave. Instead, stubborn Hughes bought the hotel.

Next, Hughes went on a buying spree. He bought three casinos. He acquired all the vacant lots around the Desert Inn. He purchased all the vacant land on both sides of the street that became known as the Las Vegas strip. He bought the North Las Vegas airport and the land around the McCarron International Airport, which is right off the strip. Hughes’ appetite for buying things was insatiable.

The lesson learned is to buy and hold all the key land that is available. Be patient. It took 40 years for the land value in Summerlin to really take off in terms of value. Hughes did not live to see this but maybe he is laughing from his grave. One thing is certain, the desert land that, long ago, nobody but Hughes wanted became worth a fortune.

Investing In Raw Land

Investing in raw land that becomes valuable depends on just a few considerations, which include:

  • Location: Select land that is in the path of future growth.
  • Hold: Be prepared to own the land for a very long time.
  • Stimulate Development: Develop the area or encourage others to do so.

Summary

Land traders achieve success by being extremely patient. They are able to imagine the future growth of an area ahead of others. Land trading may create long-term opportunities because of the continual expansion of the population. This happens frequently around metropolitan areas in many parts of America. 

If buying land appeals to you, be sure to meet with your trusted mortgage professional to discuss investment financing options.

Real Estate Tagged: Investment Properties, Market Trends, Real Estate

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