Low Dollar Land Banking in Northern Utah

The US dollar continues to fall, and regardless who holds the blame, it’s a problem that any saver will need to address. Saving large sums of money in a bank account, or under the mattress, or in the back yard can be terrible, as the hard earned money you put away every month is slowly whittled away by inflation year after year.

My goal is to get millennials excited about real estate. Between a bad job market and crushing student debt, it’s an asset class that is tough for millennials to afford. I would argue though, it’s also an asset class that’s tough for millennials not to afford (cue trombone slide.)

We say that the dollar is falling, but we need to remember, it’s falling compared to what? Prices are all relative. The dollar is falling  in value compared to gas, bread, milk, and just about everything we spend our money on. What causes this type of inflation? Generally, the excessive printing of money, which inflates the money supply. The trick is then, to hold your assets in a commodity that will not lose its value over time. We can see very easily that the dollar loses its value over time. Why do people keep dollars? Well, they can’t go bad like milk and cheese, so they're a better savings tool than those. Storing up wheat is not a bad idea, but it’s hard to get off your hands when you’re ready to “cash in” and spend your wealth on something else. I know some who are waiting for the zombie apocalypse and have stored their wealth in ammunition and blankets. That’s a cool and fun idea, but I choose to store up my wealth in real estate. In general, I prefer to buy up apartments that are ready to be rented out, but there are many ways to bank on real estate. Today I’d like to focus on using land to preserve the wealth you bring in from your career. Raw land is a very viable savings vehicle which rises against inflation and can be a very effective personal bank if used correctly.

Example: Bear Lake, a recreational area in Northern Utah currently has a lot of land for sale, with many cabin lots listing between $15,000 and $17,000. It is not unreasonable for a millennial to save up enough for that type of investment, or even to qualify for a loan to acquire the property. In Bear Lake, you could set up your very own land bank, with which you could easily short the dollar. The dollar value of most land is likely to rise at the very least along with the rate of inflation, because the dollar’s value is sinking *compared to* land. (Let’s not even consider the fact that all of this land is ready for development and the development of neighboring lots will likely cause values to rise.) Taxes are about $150 per year, and some of these lots have a $20 HOA fee to maintain roads and stub out utilities, but that could very easily be offset by renting out a tiny house or small cabin on the property. We’re talking something •very• simple, you wouldn’t even need one on a foundation to get started. Rent it out a half dozen nights a year and you cover all of your costs, and stay in it with friends and family all you like! I love vacations, but what’s more enjoyable than a vacation home that pays you to be there?

I mentioned earlier the problem of liquidity. If you’re storing most of your wealth in land or real estate, many would think it hard to access that wealth without selling off the whole asset. Many banks are willing to lend you money if it’s backed up by an asset you own outright. So if you need to buy a new car or make some other large purchase, you could borrow on a home equity credit line, sometimes called HECL or HELOC. Interest rates are usually lower for this type of credit line, and if you did indeed put that little cabin on your land, you could use the income from renting the cabin out to make the payment for you! I can’t be the only one tired of seeing .01% interest from a savings account. I prefer an asset where I have more control. I prefer to be the bank, at least whenever I can.