Friday, June 15, 2012

foresight or luck?

   Sometimes its hard to tell whether an investor is just lucky or had good foresight. A very good thing just happened to one of our family's real estate property. We bought that farm land many years ago and its not even titled. Just recently, a department store was opened two km away and a subdivision development is ongoing just across the property. Its value has multiplied many times over, far more than our actively managed investments. When pondering this, it could have also dived in value if a landfill was built near it. In short, the return or loss from that real estate investment was entirely due to the actions of the surrounding landowners. Luck or foresight? Maybe a little bit of both.


  1. I don't get it. What is the connection of the farm's value with the surrounding activities? Can you give concrete examples? I would understand, if let's say you made a store outside a school, then naturally, it's revenue would increase because it's potential customers is just nearby. But in the farm's case, how does it relate? How does it determine the land's value?

  2. Hi, thank you for visiting and to answer your question in one word: Re-zoning. There are two ways of looking at a farmland's value, the first would be to consider the income derived from the farm itself. This was how the price we paid for it was determined many years ago. However this time, its value and price is is now determined as a future residential development. This was brought about by the presence of an ongoing development right across the property and the completion of a shopping mall nearby. Had these two events not happen, (including the built up of paved roads and utilities) then we would not be able to sell the property as a residential estate or even as a commercial estate in the far future.

  3. Luck is a big factor in investment success.