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Transcription:
Meza: Hey guys thanks for joining us. Today we are going to be talking about the 7 remarkable features of land but before we get started I would like to introduce myself. My name is Christopher Meza and this is my team mate Jinesh Mehta.
Mehta: Hi how are you.
Meza: And we are going to go ahead and get started. So the 7 remarkable features of land number one is scarcity.
Mehta: Absolutely and a great example would be California land. There is actually only 2% of California land that remains to be developed.
Meza: Very true. Buy land they're not making it anymore. Number two land is fundamental. The long term trend of real estate is that it is always rising and that's because of several different factors. Why don't you go ahead and share some of the factors.
Mehta: Of course, one of those factors would be the limited supply of the land, there is also the increasing demand for it. Inflation, costs of labor, materials, financing, legal fees, and development regulations.
Meza: Number three is land provides an arbitrage opportunity. Arbitrage very simply is when you have a very willing buyer and an unwilling seller. Why don't you go ahead and talk about that a little bit Jinesh.
Mehta: Of course, I remember when a Costco moved into an area and created a lot of traffic and attracted a lot of major developers. As a result, McDonald's wanted to locate themselves directly across the street from the Costco but the owner of the land was unwilling to sell it to them at the time. Because McDonald's understood the unique value of that location, in the end they ended up knocking on the door of that land owner and said you know what, why don't you name your price.
Meza: Absolutely and that's just something that cannot happen when it comes to stocks or other types of different investments because if I have one hundred shares of IBM and you have 100 shares of IBM what's unique about mine? Nothing. It's the same, right?
Mehta: Exactly.
Meza: So that's the whole point here. That you have an arbitrage opportunity, because there are no two pieces of real estate that are alike, there are no two buyers that are the same. Number four is control but before we get into it I have to first define what an investor is and what a speculator is. An investor is someone that is concerned with how an asset will perform over time while a speculator is concerned with the up and down price movement in the short term. For example, when Enron started to crash there are certain speculators that came in and said, hey I can buy it right now while it's affordable and it'll go back up and I'll make a lot of money quickly. But what ended up happening? Enron collapse and went bankrupt, it went to zero. That simply cannot happen with land it just can't disappear.
Mehta: And because the supply of the land is diminishing while the demand for the land is growing, the value of the land goes up. And this provides valuable protection against inflation.
Meza: Hey guys thanks for joining us. Today we are going to be talking about the 7 remarkable features of land but before we get started I would like to introduce myself. My name is Christopher Meza and this is my team mate Jinesh Mehta.
Mehta: Hi how are you.
Meza: And we are going to go ahead and get started. So the 7 remarkable features of land number one is scarcity.
Mehta: Absolutely and a great example would be California land. There is actually only 2% of California land that remains to be developed.
Meza: Very true. Buy land they're not making it anymore. Number two land is fundamental. The long term trend of real estate is that it is always rising and that's because of several different factors. Why don't you go ahead and share some of the factors.
Mehta: Of course, one of those factors would be the limited supply of the land, there is also the increasing demand for it. Inflation, costs of labor, materials, financing, legal fees, and development regulations.
Meza: Number three is land provides an arbitrage opportunity. Arbitrage very simply is when you have a very willing buyer and an unwilling seller. Why don't you go ahead and talk about that a little bit Jinesh.
Mehta: Of course, I remember when a Costco moved into an area and created a lot of traffic and attracted a lot of major developers. As a result, McDonald's wanted to locate themselves directly across the street from the Costco but the owner of the land was unwilling to sell it to them at the time. Because McDonald's understood the unique value of that location, in the end they ended up knocking on the door of that land owner and said you know what, why don't you name your price.
Meza: Absolutely and that's just something that cannot happen when it comes to stocks or other types of different investments because if I have one hundred shares of IBM and you have 100 shares of IBM what's unique about mine? Nothing. It's the same, right?
Mehta: Exactly.
Meza: So that's the whole point here. That you have an arbitrage opportunity, because there are no two pieces of real estate that are alike, there are no two buyers that are the same. Number four is control but before we get into it I have to first define what an investor is and what a speculator is. An investor is someone that is concerned with how an asset will perform over time while a speculator is concerned with the up and down price movement in the short term. For example, when Enron started to crash there are certain speculators that came in and said, hey I can buy it right now while it's affordable and it'll go back up and I'll make a lot of money quickly. But what ended up happening? Enron collapse and went bankrupt, it went to zero. That simply cannot happen with land it just can't disappear.
Mehta: And because the supply of the land is diminishing while the demand for the land is growing, the value of the land goes up. And this provides valuable protection against inflation.
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