Key Takeaways
- Pay for what the land is today — never pay entitled prices for unentitled land.
- Budget $15K-$50K for due diligence and use 60-70% of market absorption in projections.
- Maintain multiple exit strategies and set predetermined exit triggers to avoid the sunk cost trap.
- Keep land debt below 50% LTV to manage negative carry and foreclosure risk.
- Account for all carrying costs (taxes, insurance, interest, opportunity cost) in return calculations.
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Test Your Knowledge
1.What is the cardinal rule of land investment?
2.Why is presenting a land deal as "bought for $100K, sold for $200K" without context misleading?
3.Why should land investors maintain multiple exit strategies?