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Pay Dirt Paperback – May 1, 2006
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I think the concept advanced by the book may work for smaller investors who don't have the time or money to invest in raw land by themselves.
But read the fine print in any offer before committing. One thing that got me was that the property management company set up to manage the pooled land bank has the right of first refusal to buy the property at the same price a third party would pay, less real estate commissions (the management company is also the sales agent).
Think of it this way. You're selling your home. You hire an agent to sell it. You pay the agent a fee as a percentage of the total price. So far, so good. Your interests are aligned with the agent (you and your agent both want a higher selling price). So your agent goes out and finds a bidder who makes an offer on your property. But what if the agent had the right of first refusal to buy your property at the bidder's price less commissions? Why would someone bother bidding if he knew he could be undercut so easily?
It also seems pretty easy for the management company to set up a shill bidder ("third party") to offer a nominal bid and then the management company can buy the property way under value. Now the management company has full control of the property, they can aggressively shop it around to real buyers.
What happened is that the property management company essentially controls the property (right of first refusal) without taking any risk. Sure, you can still make a bit of money if your 'land bank' goes up, the the upside is diminished (not commensurate with the risk you're taking).
The best land to invest in usually is too expensive for us. That's why hucksters keep selling worthless swampland and the like -- they know we average folk want a piece of real estate, but can't afford to pay much. So we buy a dream and end up with a lot out in the desert or somewhere else and can never sell it ourselves for a profit because nothing can be built on it.
Well, author Proulx shows us how to find empty land that is valuable because it's where builders and developers are heading next: the ever-expanding suburbs of livable metropolitan areas. Proulx also shows how to raise the investment capital and leverage an investment. And he tells us how to watch out for the ever-present scams.
All this, in 12 short chapters illustrated with cartoons.
The book itself is a wise investment.
Overall, a very entertaining and an easy to read book.
When the author compares the landbanking with other investments, he (intentionally) oversimplifies it. For instance, he says buying a rental property is just creating a headache for the tenants will be calling you with maintenance requests. Well, for once, you don't have to manage the property yourself (just like the pitched idea of having the author's company pick the land for investors) - there are good property managers out there. But after all, tenants are buying you a building, so I am perfectly fine with them calling me with requests. Just screen your tenants and train them. Look for Jeffrey Taylor's and Mike Butler's books on Landlording topics if interested.
Now, if you buy a rental property, 15 years from now your building will appreciate in value (we're talking long-term investing), your mortgage will be partially paid off, you will enjoy the awesome tax benefits along the way. Not sure about the tax benefits with land owning (the author didn't talk about this for some reason).
In any occasion, you're probably gonna have to do more reading if you decide to move forward (i.e. ISBN 0385010931 The Simple Truth About Western Land Investment ).
Most Recent Customer Reviews
Same old same old. Didn't think this book was written for semi-sophisticated people that might actually invest in real estate.Published on November 5, 2013 by BabyGrand
I read the book the first week it was out. The concept was new to me, but since reading the book, I have talked to a number of people who have invested the Pay Dirt way and are... Read morePublished on January 26, 2008 by William Barlow
Great book, especially for first time investors like me. I learned how to make money like the Big Boys, with a small initial investment. Read morePublished on May 8, 2007 by Betty
I must admit, I was skeptical when a friend recommended this book to me. However, I began reading with an open mind and found that I had completely misjudged what I thought "Land... Read morePublished on April 18, 2007 by J. Hurst
When people think real estate investing they think multi-family or apartments. Land is so often overlooked because of a lack of understanding the true value. Read morePublished on November 6, 2006 by John Paolin