Life, Death and Land Investing
December 26, 2008 by Steve Haight
Today’s issue of the Dirt Report is dedicated to a long time client, investor and friend.
His name is Rhett Siegfried.
I’ve known Rhett for over 20 years. In fact, he was one of the first land investors I ever worked with.
A few weeks ago, Rhett passed away. And services are scheduled for January 16 here in Las Vegas.
Today, I’m going to tell you part of Rhett’s story. As I said, he was a very good friend. But also, there’s a HUGE lesson in here for anyone who is currently investing in raw land or thinking about it.
From Condos to Dirt
I first met Rhett when he was a bartender down at the Golden Nugget in Las Vegas.
At that time, he was busy investing in several condos in the Las Vegas area. He was your typical real estate investor - he did everything from Buy/Sell the properties to fixing leaky pipes.
He had to do it all, because the rent on the condos he invested in was somewhere around $400-600 per month per unit. So there wasn’t a lot of room for positive cashflow let alone profit.
I still remember every time I went to see him… if he wasn’t at the Golden Nugget, he was working on the condos.
He bought those condos for about $25,000-$50,000 a piece. And his strategy was simply to rent them out and have his tenants pay down the mortgage. It’s a basic real estate investing strategy most people know about.
And he did well with that. Rhett, a regular working guy, figured out how to get into the real estate business. He took action and he made it happen. No small feat… especially on a bartender’s salary.
But in the early 1980s Rhett discovered raw land.
I still remember explaining to him how when you’re investing in raw land, there IS no maintenance like when you own a condo.
In most instances you don’t have to go in, spend money to improve your property and hope that your improvements add to any appreciation that happens before you sell.
Instead, I’m always looking for properties to simply buy, hold and sell.
And that’s what I taught Rhett.
***You can hear a short interview I did with Rhett on November 16, 2008 where he talks about this. You’ll even hear how he made some money from his land in a way I never even considered…
Here’s the link to the audio:
The BIG Land Lesson for Today
Now here comes the big lesson for today. And it’s one of the greatest parts of becoming an investor in raw land.
I’ve told you before that there’s typically no cashflow in land. The land just sits there until you sell it.
But when you DO sell it… well that’s when Rhett’s strategy becomes valuable. (If you haven’t listened to the audio above, you’ll hear Rhett tell you about this in his own words). So valuable that it can change your life and the lives of your children and grandchildren.
Rhett’s strategy was to sell his land investments in small pieces and create notes (meaning HE held the paper for the buyer) that would provide him with regular income. Rhett WAS the bank. Every month, he collected his checks… for years and years. -
If you listened to the recording above, you heard Rhett talk about this and what it did for his retirement income. (In the last few years, he increased his positive cashflow by an extra $1,200 per month.)
Here’s a quick summary of just one of his investments:
Even though Rhett has now passed, that money will continue to flow… to wherever he designated it should go.
This isn’t pie in the sky, sit on your couch and watch the money roll in stuff you see on TV. This is real.
Of course Rhett did all the work to get the returns he enjoyed. He made good choices at good times. He bought right. He sold right.
But when you’ve held land for 5 or 10 years, it’s often easy to forget you actually did the work when the checks just start showing up month after month.
Joy and Sadness: Two Sides
of the Same Coin
Life is about balance… and where there is sadness there is always joy in one form or another. But you have to be looking from the right perspective.
So although my friend and client, Rhett, isn’t here anymore, the joy is in what he left for his family and the ones he loved.
He left the land that will benefit them for years to come.
I rode out to Arizona earlier this week for the first time in a long time without Rhett.
He always used to go on the land tours with me and be my backup. In fact, most of the land tour pictures you’ll find on my site from the past 10 years were taken by Rhett.
He was always excited to go on those tours. And many of you reading this right now will recognize his name and probably even remember when he went on your land tour.
Rhett was really looking forward to the bridge being completed across the Hoover Dam. It’s an amazing site, even in the middle of construction. Unfortunately, he won’t be here to see the bridge when it’s done. He wanted to be one of the first people to drive across. His kids and grandkids will do that for him.
But I know he’s watching…
So here’s to you Rhett. A good friend to me and to everyone that knows you. You’re someone I am going to miss for a long time.
May you rest in peace.
Getting an Inside Scoop for
Investors in and Around
the Hoover Dam Bridge
OK… time to move on.
If you’ve been a reader of the Dirt Report for any length of time, you’ve probably heard me say that one of the keys to success in raw land is KNOWING more.
The more you KNOW the more you tend to make.
And today I want to tell you about a good resource to help you KNOW more… particularly if you have invested or are looking to invest in and around Mohave County.
The resource is called the Mohave County Landowners Association. I’m a member. And as a benefit of membership, I get access to their monthly newsletter which is an excellent “Here’s the bottom line about what’s going on.” type of resource for the smart land investor.
They publish a hard copy newsletter once a month that keeps you up to date on what’s going on.
Subscriptions are $45. To subscribe just send your information and subscription payment to:
Mohave County Landowners Association
1812 Stockton Hill Road
PO Box 3877
Kingman AZ 86402-9975
The phone number is (928) 753-3055.
If you’ve invested in Mohave County or are thinking about this, their newsletter is a really valuable resource to have. I give it my strong recommendation.
So What’s the Deal with
In the November issue of the Mohave County Landowners Association newsletter, there was a short article about all the landowners who are wondering why their property tax bills are so high in a down market.
Without getting into a long explanation of property taxes (which isn’t really necessary here), the point is that a lot of property owners are up in arms over the increase in their land tax bills.
The reason they’re high is because the taxes are based on actual sales of property done back when the market was hot. Remember, 2005-2006 was probably the hottest time on record for Mohave County property.
The reason I’m telling you this is simple:
Higher tax bills are just one more factor helping to create a whole lot of motivated SELLERS in a market like this.
Now when I say the land taxes are “high,” don’t freak out. I
have a client who had a tax bill of $20 last year and $50 this
year. So while the tax bill doubled, we’re not talking about a
lot of money.
For some reason, that’s enough to motivate some land owners to
consider selling. Especially in this market… it gives absentee
land owners one more reason to consider selling.
And working with motivated sellers is a key to profit.
We’ll talk more about that in a coming issue of the Dirt Report.
Happy Holidays from the
Before I close this up, I just want to wish all of you Happy Holidays and a Happy New Year.
There’s no time like the holidays to remind us why we do what we do and the people for whom we do it.
I appreciate having you as a Dirt Report reader and wish you the best in 2009.