We (Kevin and Brian) are of similar age and started working in real estate in the mid to late 1980s. We are both seasoned, professional investors. We’ve collectively done hundreds of land investments, and have been involved with thousands of real estate transactions.
No. These investments are not guaranteed.
All investments carry some degree of risk. Opinions might vary in describing how risky buying and holding land investments are. However, many advisors would consider an investment that is 1) an all cash purchase, 2) of vacant land, 3) in the path of growth to be an exceptionally low risk venture. That is certainly the opinion of Arizona Land Partners. We specifically avoid the use of leverage in our purchases in order to reduce the investment risk for both our investor-partners and ourselves.
Shares are typically priced at $25,000 each. On some transactions we allow investors to purchase fractional (1/2) shares for a minimum of $12,500.
Yes. On occasion we will have a single investor who desires to exclusively fund a purchase. The process and split is the same, with just a single person or entity buying all of the shares.
We pursue properties that cost as little as several hundred thousand dollars to as much as ten million dollars.
No. The title holder and buyer would be a corporation that we create for each particular offering. You would be buying shares of that corporation and your ownership would be outlined in the corporate documents.
Yes, we are.
Disclaimer: This web site is not soliciting a real estate transaction or for us to be your real estate agent. We are instead seeking to establish relationships with potential investor-partners.
The Securities and Exchange Commission doesn’t allow us to advertise our offerings through a “general solicitation” (such as this web site) to people with whom we have not yet established a “substantive relationship”. So we can’t provide that information here. By calling us you are helping us establish a relationship with you (see “Steps to take”).
But suffice it to say we are constantly looking for opportunities and good deals, and typically have something in our crosshairs or under contract for purchase.
Yes. And our money buys the same shares, with the same returns, that your money buys. We receive profits as a management team that are contingent on the distribution of principle, profits and preferred returns to the investor-partners. But we can also purchase the same shares we offer to others and so participate in the investor-partner portion of the profits. We have the same incentive you do to purchase shares.
The purpose of leverage (debt) in an investment is to amplify market effects. When the market cooperates it’s a powerful force for amplifying returns. Unfortunately, it works just as powerfully in reverse, amplifying losses. That added risk is simply something we aren’t comfortable taking.
But more importantly, we don’t feel leverage is necessary to give outstanding returns. When land investments are made strategically the annual rate of appreciation can be radical. We’ve seen values double and triple, even quadruple or quintuple, in a surprisingly short period when the development conditions surrounding a piece changed appropriately. We feel our strategy of buying a) strategic parcels, b) for cash, c) in the path of growth, d) with an eye on the development cycles gives us the likelihood of outstanding returns without taking on the risk and burden of leverage.
To be succinct, we don’t need to use leverage to generate great returns so we don’t.
That is a difficult question to answer, and depends on the nature of each piece and the kinds of opportunities that it presents. Past transactions have had hold times as short as 1 year, to as long as 8-9 years, with the majority returning all principle and preferred return within 4-5 years. Our Private Placement Memorandum grants us up to 10 years to return investors’ capital. But our expectation is that we would be returning capital much earlier than that.
The past deals with longer hold times developed specific opportunities that made staying in for a longer period attractive. Deals with shorter hold times often surprised us with early opportunities for a substantial gain long before we had expected to sell. In most investments we were able to return all or most of the investors’ capital by selling a portion of the land, then wait for an opportune time to sell the remaining pieces and distribute profits.
Land investments require patience. Great returns come by allowing the market to come to the owner and not laboring uphill to sell prematurely. These are not investments for people who must have their cash back within a couple years.
You’ve heard that in real estate there are three things that matter: Location, location, location! That’s certainly a cute phrase, but unfortunately, it oversimplifies the truth.
Selection falls to three criteria:
- Location. Of course location does matter. We want parcels that are where the growth is heading. We want demand for whatever piece we purchase to increase a lot in the near future. So we purchase only in the growth corridors.
- Parcel characteristics. This is almost as important as location. Even within the growth corridor, a piece of raw land in a particular location might be worth multiples of an adjacent piece that is the same size and looks identical to it. Access to utilities, water rights and flow, amount of frontage, access to various surrounding features, parcel shape, and many other nuanced factors affect the future value and developability of a piece. We carefully consider all these factors when we choose to purchase.
- Price. We buy deals, and we cast a broad net to find them. We’ll look as long as a property is in the path of growth and has desirable characteristics. We’ll buy when we find one we can negotiate at a great price.
No. In fact, we don’t even buy in all areas of greater Phoenix.
Although we are Arizona natives and purchased land throughout greater Phoenix, we are now focusing exclusively on the growth that is pressuring Pinal County (from the Queen Creek Corridor through the Casa Grande – Maricopa passage).
We are keenly attuned to development news and market activity in this area. We stay well versed in city plans, transportation developments, commercial projects and demographic information for this sector.
Further, we are well regarded as buyers in the southeast valley, and so get early news of opportunities from brokers and insiders. We have honed intuitions about value in these areas and can quickly recognize a deal when we come across one, striking quickly when opportunity presents itself.
We get better deals by focusing our attention on this specific region.
The notion that land investments can yield outstanding returns is not a controversial point, but there are two significant obstacles that keep many people away.
First, buying a piece large enough to effectively add the advantage of scale requires substantially more capital than most investors have available. The highest returns typically come from taking a large piece and preparing it for sale to multiple users. The size and price of that initial piece puts it out of reach for the majority of investors.
Second, the best returns require a specialized insight and sensitivity to market cycles and entitlement activity that is simply beyond most investors’ reach. For land, there is a substantial difference in value during a growth versus contraction phase. To someone unfamiliar with land market dynamics the hold time can seem arbitrary and daunting. But to those who are well versed in the growth cycle, commercial development, and municipal improvement plans of an area, the hold period is a strategic part of the investment.
Although the vast majority of investors would love to get the annual returns that are typical to strategic land investments, most of them don’t have sufficient capital to buy the strategic pieces, or the insight and the patience to carry them through a hold period.