Physical Assets is the Fifth Flag
This is part of our Pillar Content of Flag Theory™ where we detail how you can take a well proven strategy for protecting and growing your self and your wealth apply it. The strategy is comprised of 7 flags, and Physical Assets is the 5th flag.
This can be gold, other precious metals, but most commonly it is land. We’d like to believe that the country in which we live is infallible, but the truth is that governments are fragile, and inept. They can, and do topple. That’s why it is important to allocate a portion of your wealth or assets in a safe haven.
Why Invest in Productive Land?
1. Appreciating asset
3. Food and Water
4. Last bastion of Freedom
Productive land is one of the most valuable appreciating assets in the world. There is a limited amount – and it can be strongly held with a freehold deed. If the land is arable or has potable water, the price will increase accordingly. Call me prepared, or call me paranoid – I see having a hideout of productive land, food and water being one of the highest priorities.
Clean Food and Water
There most likely will be massive shortages with organic food and natural clean water supply in the 21st century. The rates at which fish are being pulled from the oceans should be a cause for concern. Some estimate that there will be no edible fish left by 2030. Many people provide the arguments of fish farms, or that technology will solve these issues. Or maybe technology won’t be able to fully replace clean water or healthy organic protein sources. Maybe natural is best in these instances, and whoever controls the supply of clean food and water will be able to dictate pricing to the increasing demand.
The amount of potable water easily available in the world is decreasing at an alarming rate. In fact the statistics for this seemingly abundant resource show it to be anything but abundant. Wars over water are extremely common in the most crowded places on earth. Take for instance India and Bangladesh, where a decade long war has raged over water rights to the Ganges river which flows through both countries. We oftentimes take for granted the fact that we have clean water (especially if we live in a developed society), but much of the world doesn’t even have clean running water.
As investors and entrepreneurs – if we can sense the changing of times and anticipate the coming waves of problems that will occur, we can position ourselves strategically to survive and thrive no matter what happens in the world. The future is nothing to fear, unless you are unprepared. If you are prepared, it is a time for opportunity where anything is possible. Trillions will be made and lost depending on who is able to capitalize on emerging economies, fresh food, and clean water.
By 2025, 800 million people will be living in countries or regions with absolute water scarcity, and two-thirds of the world population could be under stress conditions. Source: FAO
The key to success and survival in the future involves: Internationalization through a foundation of flag theory and access to healthy food, and clean water. This is possible to achieve for yourself with physical land.
There are places all over the world which have a potential for physical land. However, unlike an offshore company or trust which is virtually the same commodity (a company in BVI is always a company in BVI) land is highly contingent upon the individual property. This makes it hard to strategically state that unequivocally the land in one jurisdiction is better than another.
In general, land ownership in Asia is also highly restrictive – but there are instances in which it can be done. Two countries where I see a potential for land in Asia in particular are Malaysia and Singapore.
For American Citizens
US citizens almost never have to pay US taxes on non-investment, non-income producing property located outside of the US. There are obviously some countries that have little to no property tax. Thus, a large amount of money can be legally invested in the US, tax free, without reporting requirements in the form of non-income producing property.
International property is a great way to invest internationally, however, you can’t receive capital gains on the property, so it must be a single-family home in most instances. This is still highly desirable for many people – who enjoy the power of their dollars invested abroad and enjoy living large in foreign countries. You need to be particularly careful when buying international property, however, particularly during the acquisition stage. International property is one of the best ways to get wealth legally transported outside of the US.
This property can also function as a great vacation home, or lifeboat strategy if anything bad ever happens. Timeshares are not advisable, but what is a nice play and can get you both a 2nd citienship and an investment in land are property investments listed on passports.io
Having a place to live elsewhere is a key element of 5 flag theory.
What to Look out for When Investing in Land internationally
Despite its advantages, there are many things you have to watch out for when buying international property. It can be very difficult to get a clean title in some instances. The title is the piece of paper that certifies that you legally own the land. There are many swindlers out there who will promise a piece of property that looks great on paper, and in person; but in reality the two are not connected, and one or both are fake and not for sale.
What to Do
You make sure you are actually buying the land, house or property that you think you are AND that you can properly deliver on the terms of the arrangement. You may have an issue getting the land properly conveyed if you don’t meet every stipulation in the contract. This is a common way for foreign lawyers to dupe unsuspecting investors. Always get YOUR OWN private lawyer (not one recommended by the real estate agent and especially not the buyer) and make absolutely certain that you perform due diligence.
Once again, never, ever use a lawyer or real estate agent that the property owner suggests. You’ll always want to talk with a reputable, well known lawyer before executing any business transaction overseas. Oftentimes laws will be completely different than what you are used to. The contracts and title will most likely be in a foreign language, and it can turn out that very ‘nice’ people, just up and disappear, leaving you with an expensive (yet worthless) piece of paper and no property. Performing due diligence is a key step to this process. The more you know, the less chance of someone “pulling the wool over your eyes”. Only non-investment property can be tax exempt. However, if you are going to buy some investment property overseas, you would be very wise to use a property management company.
Oftentimes, the property will be sold with tenants already installed, and you will never have to worry about the units going vacant. By using a property management firm, you also don’t have to worry about the hassle of repairs or collecting rents. Using a property management firm is a sound idea from all angles. Productive land may not be on the radar of many readers who are more concerned with their internet business, and growing to exit. It’s not something we cover in great detail at the moment, we are more concerned with the other flags of Flag Theory.