Most people only solve one.
There’s a line that’s been passed around for years, usually credited to Jim Rohn, who said he got it from Neil Armstrong.
Going to the moon only involves two problems. How to get there, and how to get back.
The key is you don’t leave until you’ve solved both.
Rural land investment is pretty similar, although a lot of people ignore one of the problems.
First problem is pretty straightforward. You find something underpriced in an area where you expect values to grow. Then you run all the traps, and if it checks out you have something worth buying.
What a lot of people forget is the second problem. What’s the plan for unwinding it on the back end?
Then they buy it anyway.
Ask how they get back out and you’ll usually get a shrug. Something about how land always goes up.
There are only so many ways out of a piece of ground, and they’re all worth knowing before you own it. Hold it and sell it whole to somebody who wants what you wanted. Split it into smaller tracts, since smaller acreage generally brings more per acre. Develop it, if the location and the money and your patience all happen to line up. Put a building on it and collect rent. Farm it or lease it and let it carry itself while you wait.
None of those is the right answer. The point is knowing which one you’re betting on.
You don’t want to be rigid about it. Things change. Sometimes a better exit shows up than the one you planned on. A road gets built, a neighbor decides he’d rather be your buyer than your neighbor. Someone shows up with a plan you never considered and offers you a price you didn’t expect.
When that happens you don’t turn it down, and you don’t fret about being “wrong” about how you would exit.
But there’s a difference between changing your plan and never having one.
And there’s a difference between a deal that looks good going in and a deal you know how to get out of.
A land deal needs to work today, on today’s numbers. It also needs a believable way back out before you write the check. Both, not one.
Miss the first one and you overpaid. That stings, and you find out about it fairly quick.
Miss the second one and you didn’t buy an investment. You bought a place to keep your money where you can’t reach it.
That one’s quieter. Nobody finds out for years.
Then they need the money.
P.S. Most of what crosses my screen doesn’t survive the first problem, let alone the second. When something clears both — priced right today, with a way back out I can actually explain — I send a short note to a small list of people who asked to see them.
No spam, no newsletter, nothing on a schedule. Just a note when there’s something worth looking at.
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