Nearly two months before the dramatic losses in the equity/commodity markets during October 2008, the Department of Labor issued a number of statements in the Federal Register regarding employee’s diversification of holdings, such as: “...Other lapses in diversification may involve omission from portfolios of asset classes such as...real estate...investors sometimes fail to diversify adequately.29 Inadequate diversification....recently cost participants perhaps $42 billion annually, the Department estimates.30...”
The Department of Labor further stated in their report: “Investors sometimes fail to diversify adequately and thereby assume uncompensated risk and suffer associated losses...” a recurring theme that repeats itself during every equity/commodity market downturn. Crestmont Research notes that “...the compounded average annual change in the stock market is near 5% over the past century...”, that “...Investors only can spend compounded returns, not average returns...” and furthermore that, “...investors from today will never achieve the long-term average return. Not in ten years, twenty years, fifty years, or even the almost eighty years that represent the most recognized long-term average return...”
Most financial advisors, CPA’s, attorney’s, and certified financial planners are all familiar with acquiring large parcels of undivided pre-development land to accumulate wealth over time. The familiar term is landbanking. For centuries, it has been an effective tool for the wealthy to buy/hold/sell very large tracts of land in the path of growth, but up until the last decade was out of reach of the average person.
There are other forms of landbanking, such as acquiring smaller lots of divided land, or entering into joint ownership of a large parcel of land that is already subdivided and sold to numerous owners to be landbanked. The problem with this type of landbanking is it is not attractive to developers.
Strategic LandBanking is different from traditional landbanking (or Land Banking). It is the purchase of very large tracts of undivided pre-development land (30 -100 acres) located in the path of a medium sized city’s growth. It is also located as part of a diversified regional economy and close to utility and government provided services. As the population and industry grows outward, then developers and municipalities buy these lands to build commercial, residential or government properties to accommodate urban sprawl.
Strategic LandBanking provides individuals who have moderate levels of income, cash on hand, 1031 exchanges, 401-K Rollovers or who have Self-Directed Retirement Plans/IRA’s the opportunity to participate in ownership interest in this type of property. Strategic LandBanking can augment, balance and diversify retirement planning strategies.
For more information on Strategic LandBanking, visit http://landbanknation.com
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TR Miskimon of WA 11:18AM December 24, 2008