ULTRA-LUXURY
LAND INVESTMENT:
PIONEERING PRESTIGE IN
STATEMENT PROPERTIES

 

As a true land investor, your acumen in delving into each layer of analysis, while having the vision to see the potential in a parcel, will elevate you from a crowded arena to an esteemed echelon in the realm of land investment. Investing in land is an intellectual pursuit, a game of wit and skill. Your ability to discern value where others see none, to see potential where others find risk, turns land investment from a game of numbers into an art form.

As with all art forms, mastery comes not just from talent but from a deep understanding and practice of the craft.

Land investment is a pursuit of a deeper understanding that transcends the superficial veil of market prices. It is an art that illuminates the true essence of a piece of land, well beyond the sticker price. In the mind of the artist, market forces and intrinsic value combine to create and reveal the true value of a parcel of land and portend its potential while providing a glimpse into the possibilities.

We’ve all heard the expression, “Everything is worth what its purchaser is willing to pay for it.” That famous quote isn’t just true for existing or developed property, it especially holds for the art of land valuation.

Unfortunately, land investment is still permeated with conventional wisdom and continues to rely on outdated traditional practices. Among these are appraisals, a longstanding touchstone of land valuation. Yet, as an investor stepping into this realm, it’s important to ask, “Does the conventional lens of appraisals truly capture the essence of land’s value, or does it merely skim the surface?”

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While assessors and appraisers may be crucial, (and required in many instances), especially for your everyday mortgage broker/lender or home buyer, and for tax purposes, the reality is much different for “statement properties.” In fact, it doesn’t take much time or effort in the grand scheme of things to land a state property appraiser’s license or certification. But is an appraiser of this ilk qualified or fully invested to truly assess the market value of the types of properties and parcels of land that will create a lasting legacy for you and your descendants? 

Appraisers are more like detached spectators or statistical analysts who may be precise with their numbers, but often miss the nuance of involvement or engagement with the inherent risks and forward thinking of property investment.  

Appraisals still rely heavily on comparables, but when it comes to statement properties, one is certainly nothing like the other. Land investment is ever evolving with a weather eye on the future and the potential. Appraisals, on the other hand, are stuck in the past and only consider then and yesterday, not tomorrow and beyond.

An appraisal uses those comparables and price history to create valuation without taking the uniqueness and potential — essence if you will — of a particular parcel of land into consideration. Although precise and formal, an appraisal’s use of comparables leads to a generalized valuation masking underlying assumptions and estimations. It’s a facade that could lure investors into a false sense of security, veiling the risks that lurk in the shadows of unknown variables. You’re not buying a house in a suburban subdivision, (that’s a different discussion), you’re investing in a unique parcel of land with its own landscape and topography. The vistas, the flora, the waterways, and geological formations are all uncommon. There are no “comps,” no cookie cutters.

If you tell a lender or another investor, “I have an appraisal,” you’re saying, “I have deferred my own judgment to someone else.” If you wish to convey mastery and prestige, you should be relying on your own valuation techniques.

As an investor, you need to look toward unseen horizons and uncharted territories where the future of land investment lies. Discernment rather than appraisals will guide you forward. Eschewing conventional wisdom and challenging established norms while carving a path with your insight will allow you to navigate all the layers and nuance of land valuation.

To that end, there are six major elements to take into consideration when it comes to investing in raw, undeveloped land — illiquidity factor, risk-reward balance, cost dynamics, approvals, macro and micro market conditions, and cash flow. As you develop the land in which you invest (if you so choose) with communities, economies, and society, you’ll need to navigate zoning, parcel partitioning, land rights, infrastructure, and, of course, politics, while understanding the challenges of approval, development, and market risk.  

When you master these methodologies, you’re not just another investor; you become a connoisseur of the finest details, a person of eminent respect and prestige in the land investment community. It’s about the nuance, the discipline, and the insights that set you apart. In a world where anyone with capital can enter the market, your intellectual arsenal will make you invincible.

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About Eric Metzger
Eric Metzger, CEO & Founder of MRLO Partners is a 25-year luxury land investing expert specializing in high-end developments around exclusive destinations across the U.S. and the globe. With a commitment to reshaping the narrative around land investment, Metzger has assisted over 8,000 high-net-worth investors in acquiring over $2.4 billion in luxury land and estates.

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