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In theory, does land appreciate at the risk-free rate? Or does holding land mean that you lose the opportunity cost of what you could have otherwise done with t
by totalZero 9y ago
In theory, does land appreciate at the risk-free rate? Or does holding land mean that you lose the opportunity cost of what you could have otherwise done with the money?
- Spooky23 9y agoNo, there is lots of risk in land, particularly if you borrow money to buy it! People have different risk evaluation and time horizons. If you are sitting on a lot of capital, it’s a no brainer to buy land when financial bubbles pop and leveraged owners need to unload cheap. Not only do you have a long term inflation hedge, but it’s real property, which means you can borrow against it to get cash without paying taxes via dividends or sale. Iowa is great for investors like this because the whole state is just a big corn factory. The government tries to keep commodity prices less volatile, so you can project lease income with some precision using the value of corn.