Responsibility in Developing: Why More Need to Grasp It

Throughout these past few weeks I have been writing on various real estate issues. This week is going to be a little different. Drawing inspiration from a series of essays from the This I Believe project, this week I thought I would share with you, the reader, why I write about real estate and sustainable elements.

I believe that responsibility should be the main focus of real estate developers world wide. The real estate industry, up until recently, has been a very hot market, and to some extent will always be at least in California. Many people profit from investing in real estate and developing land. It is because of this ability to gain a profit that people sometimes forget what is really at stake, and that is depleting mother nature and mother Earth of precious natural resources; chiefly land. The Earth itself is one very large piece of real estate. The size of a family’s home, no matter how big, is still a very small decimal point of the Earth. It is when many millions and millions of families build homes and other buildings that we slowly consume the Earth’s remaining land. Land is not something that is as abundant as we would like it to be. Open areas of nature are dwindling by the minute. It is because of this that I believe developers need to come to a compromise with our Earth and give back a little bit for taking so much from her.

Throughout building my blog, I realized that I slowly became interested in not only real estate developments all over the country and the world, but that there are other ways in which we can build and develop land. When I think responsibility concerning building, I think of “sustainability” and “smart growth”, which are the only ways in which we can build and satisfy our needs for homes, office space, etc. while doing our best to minimize our impact on our surrounding natural environments. I must admit, when I first became interested in Real Estate it was simply because I thought it was a smart career move. I realized that so many people have made so much money doing it. I landed an internship and was wowed at how much money my bosses made and how seemingly easy it was to get into the industry. It was a period in time in which I was enrolled in Business school, which made me think of only one thing: profit. It was a selfish and self-motivated effort to get into the industry, but I am glad I found a way to look at my career in a more positive light. After changing majors to Planning and Development, I realized there was a more sensitive way to build which was not only profit oriented, but somewhat philanthropic in terms of giving back to the Earth. The need for homes and shelter will never fade as long as we humans are on this planet. Throughout history, civilizations’ housing was the best way to tell much about who those people were. Nothing else can tell more about a people and their culture than housing. Housing is the best form of outward expression. Solving Global Warming and alternatives to fuel is a very complicated issue, however I believe that I am capable of at least discovering ways in which we can make an office building somewhat self sufficient and not dependent upon the city’s power grid or sewer systems. Through rigorous cooperation with engineers as well as architects, I believe I can make buildings responsibly and in a way which can maximize our stay on this planet a little longer. I hope others will follow this same path of responsible building because I think with how much money is being made in the industry, it would show a lot of character to put some of that profit back into building something that is more environmentally conscious.

Real Estate's Last Frontier: The Farm

For many involved in the Real Estate industry, the past two to three years has been an unsuccessful few years. What was once a hot industry could now be considered a cold product. While there are a few areas like the condominium market which haven’t taken a complete turn for the worst, one area of the market often overlooked is now catching the attention of savvy investors. Farmland is now one of the only areas of real estate which is on the rise, particularly in the Midwest.

Why is it that farmland value is on the rise? The answers have a few components: gasoline, export and the shortage of land in urban areas. As was written in the New York Times, “The Fed can always print more money but it can’t create new farmland, which has generally been rising in value since the late 1980s”. According to the New York Times, American farmland has appreciated in value by 50% between the year 2002 and 2005. Farmland is not something that anyone, even the government, can pull out of thin air. Existing areas of farmland are a valuable piece of real estate. What I mean by gasoline influencing the rising cost of farmland is that there is an increasing demand for bio-fuels. With the ongoing war and the pending oil crisis, alternatives to gasoline, such as corn-based Ethanol (although not a terrific alternative to gasoline) have been developed and are being researched. As is said in the description, Ethanol is made from corn, which means that farmers need to produce copious amounts of corn in order to have a considerable amount of Ethanol produced. Exports are another way that farmland is making money. With our weakened dollar, international trade has increased. Pistachios and Almonds have been selling very well, leading to a 28.2% three year annualized return according to the Hancock Agricultural Investment Group. This increase in the sale of nuts could be attributed to research which has discovered that eating nuts can promote cardiovascular health.

Not only is there money to be made by buying farmland, but also in investing in farmland. The Hancock Agricultural Investment Group manages portfolios for large investors in farm land and reports a twenty percent or more increase in returns for the past three years. This type of investment is not something that just anyone can do. The minimum investment is something in the upwards of forty million dollars. Smaller budgeted investors apparently need not apply.

If you are a smaller budgeted investor, there are ways to try to make money in farm land. Investors could go through companies to do commodities-tracking mutual fund or a commodities-based exchange traded fund. In a sense it is like an agricultural stock market. Many companies are starting to create branches that specifically cater to investing in farmland, like JPMorgan, who like many other financial service providers, already manage farmland.