Here’s ONE Bank That Doesn’t Need a Bailout

I’m glad the election is over…

For the past few weeks, my phone has been ringing off the hook with so many political calls asking for my “support,” I can hardly have a normal conversation.

Every other sentence is interrupted with the call waiting beep.

“Hi this is Steve… what can I do [BEEEEEEEEEEEP] for you?”

You see how annoying this can get.

So I’m glad it’s over. And it really doesn’t matter to me who won… not from a business standpoint anyway.

Because my investing strategy for both myself and my clients doesn’t change one bit. The land business is based on fundamentals that don’t shift with the changing of a President.

And the land business seems to fly low enough under the radar that the government doesn’t play fast and free with the rules (like they did when they decided to ban short selling on certain stocks a few weeks ago).

That DOESN’T mean that a new Commander in Chief in the White House can’t bring even more opportunity to the table… but only time will tell.

So for now, let’s shift back to something that you’re hearing about in the news pretty much every day.

It seems like there’s a log jam in the big government bailout plan.

The money (your money) is flying out of the Treasury, but it’s getting stuck.

Apparently, the masterminds of the bailout plan forgot one thing:

They forgot that they can’t force a bank to lend money. (At least not yet.) That was the whole idea. Give the banks the money. Then have the banks lend the money to get the economy moving.

But banks are still in trouble. And no one really knows how bad it’s going to get.

And that brings us to the point of today’s Dirt Report.

Because there’s one “bank” that shows no signs of needing a bailout…

It’s Called the Land “Bank”

In a market like this, I call it, “The Bank of Opportunity.”

“Land Banking” is the very same strategy that is responsible for nearly 100% of my success and the success of my clients and those around me.

And you’re going to laugh when you hear just how simple the strategy of land banking is.

Ready?

Buy Land and Wait

How’s that for a secret investment tip?

Buy land and wait.

You buy land in the path of growth and development and you wait until it comes to you. Then you sell (maybe).

Of course it’s a bit more complicated than that. Especially the BUYING part. You have to do that right for the whole thing to work.

But the basic idea is very simple. You put the land in your “Land Bank,” and make withdrawals (meaning you sell) when the time is right.

There are a lot of people YOU know who made their fortunes using this very simple (and repeatable) strategy.

I’ll talk about some of them in the coming weeks and go into a whole lot more depth into their strategies in my “From Panic to Profits Report” that will be published in about 14 days. (Be on the lookout for a special email when it’s ready.).

So let’s talk about one example of a successful land banker you definitely know:

It’s Bob Hope… the comedian.

No one’s really sure exactly how much land he owned, but it’s been estimated that his holdings were somewhere between $100-500 million.

He owned a LOT of land.

In fact, former Palm Springs Mayor, Frank Bogert, was once overheard saying, “Every time I found a piece of land, it turned out Bob Hope owned it…”

Sure Bob Hope was famous, and he was paid very well for his celebrity. But during his career, Bob Hope discovered another fast track to living the American Dream. A secret strategy that doesn’t require you to be famous, popular or even funny. For him, that secret strategy was investing in land.

I call this a “secret” only because so few people know about it. I’m not sure why that is, because when you realize just how big the opportunity is in this business, well, you’ll be wondering why MORE people don’t know about it.

(Feel free to keep this secret to yourself…

Reminds me of someone else who knew the secret… General Douglas MacArthur.

Here’s what he said about the land business:

“All a man has to do to get rich in America is find out where people are going, get there first and buy land.”

I’m telling you all of this simply to show you that land investing is as old as the hills… literally.

But THIS time in history is particularly special if you’re interested in profiting from land.

That’s because there’s something happening out there right now that very few people seem to be paying attention to.

(Remember, in the land business, the more you KNOW, the better you tend to do.)

I call it…

The BIG Opportunity Almost No
One is Talking About

So if the market’s so soft and property prices are deflated right now, then why is this time such a smart time to become a land investor?

The obvious reason is:

DEALS. DEALS are everywhere.

It’s the same reason Warren Buffet is out there buying up stocks right now. Billions of dollars of them. He sees deals. Good value for the smart investor.

But THESE land deals are different, because there’s something happening right now that doesn’t happen very often in the land business.

The BIG guys are hurting.

The BIG developers are sitting on TONS of dirt that is ready and waiting for development. Some of them even have water and electric… everything but the structure.

Problem is, the structure might not come any time soon. Because no one is interested in buying right now. Financing is tight.

And without the development, the developer is stuck sitting on dirt. Dirt is a liability on their balance sheet.

(There’s no cashflow in dirt folks.)

And since many of these developers are publicly traded companies, too many liabilities can hurt stock prices.

So what are they doing?

They’re basically walking away and taking losses. And they’re selling for pennies on the dollar…

Because they don’t have the luxury of a 5-10 year hold (which is what any smart land investor should be thinking about)…

Most Private Land Investors
CAN
Wait 5-10 Years
(Maybe Even You)

It’s a huge opportunity for the savvy investor.

Right now, huge developers like KB Homes (http://kbhomes.com) are sitting on acres and acres of land.

In fact, here’s PROOF.

The article is titled:

“Concordia Homes of Nevada Closes Sales Offices”

Read the article…

The obvious question for the savvy investor is:

“What happens to all that land?”

Well that’s exactly what we’re talking about. There’s opportunity almost everywhere you look.

But it gets even BETTER…

Because some of this land is pretty different than your average good land investment. Usually, when you invest in raw land, you have to go pretty far from development to get the deal you need to lock in your profit on the buy.

And that usually means that no one has invested in the infrastructure (electric, water, etc.) that has to be there before development can really take off.

That’s the reason for the 5-10 year hold. You hold the land and wait for development to come your way. If you know what you’re doing, investing in raw land is little more than a waiting game once you acquire the property.

But SOME of this land I’m talking about with the big developers is what we call “close-in.”

That means it’s not 40-50 or more miles outside of civilization. It’s much closer.

In a normal market, that also means it’s a whole lot more expensive.

But to these developers, it doesn’t really matter how valuable the land is if they can’t turn it into cash and get it off their list of liabilities.

And that’s why NOW presents a very interesting opportunity for land investors.

Because there are deals like I’ve not seen before. EVER.

It’s not everyday that the big guys are in a position that puts YOU in the driver’s seat.

What Would Bob Hope Do?

Now think about this. Bob Hope made his fortune in land.

But when Bob Hope was investing, we weren’t in a down market.

He was paying good money for good land. And he STILL made a killing.

Just imagine what would have happened to Bob Hope’s real estate returns had he bought in a market where the BUYER has as much power as he does right now.

That surely would have brought a big smile to Bob’s face.

When I say that the land business can be good in an up market or down market, this is why.

A down market is where you get the deals.

An up market is where you get paid for being smart during a down market.

It’s really pretty darn simple.

He Got a Return of About 19,000%…

You read that number right…

That’s 19 THOUSAND percent… That’s a 19,000% return on an investment.

Think those numbers are possible?

Not usually in normal times. But when markets are in turmoil, I’m not sure there’s a limit really. And that’s because…

Crisis = Opportunity
(For Smart Investors)

I’ve been in the land business a pretty long time. And I’ve seen good markets and I’ve seen bad markets.

With the experience I’ve gained riding through all of those markets myself, I’ve realized something important you need to think about.

I’ve realized there are basically two types of people in this world. The first type of person looks at a crisis and worries about what’s going to happen. They fret, they fidget and they, more often than not, are just happy to sit there and “ride it out.” They’re so scared of losing they forget to even think about how to win.

[I've just described MOST people I know.]

Then there’s the other type that looks at a crisis and spends his time thinking, “Where is the opportunity in all of this mess?”

Those are the people that make it. Those are the winners.

Here are some numbers to give you an idea about how BIG opportunity can be in a “crisis.” This came just last week from an investment letter I subscribe to from Weiss Research…

Here’s a quote:

“In 1929, my father borrowed $500 from his mother and used it to sell short the stock market. He told me that, by the time the market hit bottom, he had close to $100,000. And he didn’t start before the crash; he actually began in April of 1930 after the ‘29 crash.”

Now I’m not a math whiz, but if you invest $500 and get $100,000 back… that’s well over a 19,000% percent ROI.

This investor was in the right place at the right time and had access to the knowledge to make smart moves–while everyone else was running for cover.

It’s a little bit like the land business right now. Most people are skeptical about the current real estate market. They’re reading the papers, watching the news and seeing the red ink day in and day out.

And that’s why, when I get a call asking for advice about what to do in a market like this, I usually say something like:

“Don’t be like most people.”

How’s that for specific?

Here’s the deal:

The media surely isn’t talking about opportunity. And if you looked at the ad revenues that reporting “good news” like that brings in, you’d understand pretty quickly why “bad news” is their bread and butter.

Here’s a good rule of investing to remember:

Just because someone says something doesn’t make it so. A good investor can listen to all of that and STILL figure out what is ACTUALLY happening… in reality.

KNOWLEDGE IS POWER

I pay a LOT of attention to a few things that are very important to the future success of my investments. One of those things is institutional buyers and the other is major developers.

I call these guys the “big guys.”

They’re well funded and they know what they’re doing.

But I don’t listen to what they say… I watch what they DO.

Because when a major developer goes in and starts buying up 25,000 acre tracts of land, you know something is going on. Or at least it’s probably going to start…

That’s because all of that buying power can actually CREATE a new market. It can CREATE demand. The big guys have the funds you need to get a ball like that rolling. And I’ve seen it happen time and time again.

So when do you think “big guys” tend to make their acquisitions?

One of the times they tend to do it is when everyone ELSE is freaking out. Because THAT’S when they can find DEALS that would never exist otherwise.

Times Like
NOW

This is really the best example I’ve ever seen of the phrase, “Knowledge is Power.” Actually it’s a little bit different in the land business. It’s more like “Knowledge is MONEY.”

In high school, the smart kids didn’t usually win. The prizes often went to the jocks or the popular kids.

Well thank GOODNESS that’s not how it is in my business or I’d be sunk. In the land business, the smart guy wins.

The guy who has a better sense of what is actually going on tends to win.

So you’ve got to be careful who you listen to.

Think about THIS the next time you’re watching the news or reading the paper:

“Chances are, the vast majority of the people that contributed to bringing you that story are broke… working for someone else… just trying to make ends meet.”

Is that really someone you want influencing the direction of your financial future?

Hang in there, opportunity is everywhere. Learning to spot it is a process… so just keep moving forward.

But before you go, you’ve got to read this:

http://www.nytimes.com/2008/08/10/us/10kingman.html?em

It’s an article about Kingman Arizona, right in my backyard. That’s where Leonard Mardian (one of the “big guys,” a major developer) went out and bought 47,000 acres of land years ago.

Remember how I said I pay attention to the actions of MAJOR developers?

Now Mardian bought the land, in part, because of the Colorado River Bridge that I discussed last week. But BEFORE his purchase, there was little demand. Not like there is now.

His MAJOR purchase (47,000 acres is a LOT of land folks) started the machine. People started paying attention. Then MORE people started paying attention.

Well fast forward a few years and look at what’s happening. Read the article.

So here’s a question:

Why would an article like THIS appear in the New York Times? A newspaper with readership of over a million subscribers (not counting online subscribers)?

Hmmmm….

Time to Put On Your, “I’m NOT Like
Most People” Hat and Really Think
About What’s Happening Here

Let me answer the big question with another question:

“What do you think could happen to the value of an up and coming affordable development when you tell an additional 1 MILLION people about it?”

The demand is being created right in front of your eyes folks. It’s all part of the plan.

And when you learn to see this stuff and REALLY know what’s going on AND take action on that knowledge… Let’s just say the payoff is well worth developing this skill.