MIDYEAR REVIEW OF INVESTMENTS AND PERSONAL FINANCE : Personal Best

We publish advice and insights from all sorts of investment and personal finance experts--much of it contradictory. So to find out what works in real life, we went to the source, asking our readers to recount their all-time best financial decisions. From hundreds of letters, faxes and e-mailings, we’ve selected a few of the most interesting to publish or excerpt. Thanks to everyone who contributed.

Land, Land and Land

One word describes the best investment I ever made: land. But there’s more to this story.

Twenty-five years ago, I owned a three-bedroom tract house and needed a new and bigger home for my growing family. I looked around for another tract house and found the cost per square foot of such homes too high. I went looking for a lot on which to build a custom house.

I preferred an area zoned for one acre in L.A. County. All the one-acre lots I considered were too expensive, but I did find four acres reasonably priced. The acres were part of an avocado grove. I bought them

with a small down payment. The owner carried the mortgage at a low interest rate.

I started to build my house on one acre. I hired a college student to draft the plan. He essentially copied a tract home modified to my liking. Then I sent it out for bids. The bids were too high; therefore, I became the owner-contractor. Doing so reduced the cost of the house by about 20%. I also did all the electrical work.

I watered the trees and generated income from the avocados until the income from the yearly crop failed to pay the water bill.

I used the land as collateral for loans for my childrens’ college education and to start an engineering firm.

I sold the acres one at a time, whenever I thought the market was right. The least return on an acre was 100% and the best was 1,000%. I estimate the average yearly return at 20%, without the avocado income.

The forces making this investment profitable were leverage, low mortgage interest, compound appreciation, living on the land, depreciating assets (trees) and, most important, patience. There were times when I thought I couldn’t give the land away. But the investment worked out all right. And, best of all, I still have my little acre in L.A. County, a place I call home.

GUS GARCIA

Hacienda Heights