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Identifying Qualified Land Investment Agents: What To Look For
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What qualifies as competency for land investment agents?
Land investments are a promising, alternative means to achieve growth under current market conditions. Working with qualified agents is key to managing risk.
Due to rising interest in alternative investments - a response to the middling performance of market-traded securities - there has also been increased concern about the legitimacy and transparency of many of these assets. For example, the broker-dealer Ponzi scheme of Bernie Madoff may go down in history for both its size of losses as well as its instructive value.
Preceding Madoff’s spectacular debacle in 2008 was the 2005 Langbar International fraud. Here, the Nominated Adviser failed to carry out due diligence while the London Stock Exchange concurrently neglected to check compliance with Alternative Investment Market (AIM) rules.
In the wake of events such as these, many investors - and certainly many investment advisors - have had to increase their skills at identifying where and in whom to seek real asset growth with minimized risk.
Land investments should be approached with the same kind of scrutiny, as should land investment agents. There is increasing interest in raw land, due to how the population increase in the UK has not been adequately met with sufficient home building. The consequential pent up demand for housing is spurring Local Planning Authorities to consider rezoning some tracts of land. To the investor, this is an opportunity to create significant asset growth in a relatively short period of time.
The wary investor is wise to go about this with caution. Several fraudulent schemes have been unleashed on less-sophisticated investors, garnering much attention in the press. But individuals (typically investing a minimum of £10,000) working through a third-party financial advisor should inquire about a property fund’s management team. That conversation might cover the following:
Track record - What successes does the land investment agent have on its record? What about failures, or poor performers?
Education/Experience - While many professionals endeavour in the land investment field without a university degree in that specific area, they should have accumulated knowledge in their work. The excitement of rapidly appreciating land values sometimes draws in unqualified people only recently landed in the industry.
Expertise - Land investment is not a simple buy-sell proposition. In fact, a team of experts typically needs to work together to turn a property into something of greater value. That includes individuals who can provide the best analysis for selecting land that is ripe for acquisition, for negotiating a workable purchase price, for development planning, site assembly and to strategically time the forward sale, all in the interest of maximum returns.
Transparency - All accounting of activities, expenditures, milestones, transactions and returns need to be reported on a quarterly if not more frequent basis, audited by a third party.
Not all variables can be predicted in land investments just as uncertainty exists in all types of investments. With the use of a qualified financial advisor - whose job includes clearing qualified land investment agents - an investor can at least reduce the risk of working with the wrong parties in this alternative investment.
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