How you can profit from the 'Rebuilding of America'

In today's blog, I want to address a tremendous financial and social opportunity that is available to anyone with the knowledge I will share and the vision to do something with it. It's the "Rebuilding of America".

What am I talking about?

We are sitting at 'ground zero' for a land/construction development boom that, by the year 2030, will make the build-out following World War II look like "Lincoln Logs". (I assume that most who read my blog are old enough to know what Lincoln Logs are.)

Most state and local governments across the US conduct their own research to estimate trends in demographics, households, markets, and industries in their geographies over the coming years. These projections serve as the basis they use to develop localized growth plans and public policy related to future development requirements for their geographies. However, until recently, there has not been a "national" study conducted to evaluate the development needs for the entire United States.

In December 2004, the highly acclaimed Brookings Institution Center on Urban and Metropolitan Policy supported a project titled "Toward a New Metropolis: The Opportunity to Rebuild America" by Virginia Tech urban planning professor Robert Lang. This is the first study of its kind, whether by government, public or private sources. I will be referencing information from this study and others in today's blog. (Click the Brookings image below to view this study.)

The purpose of this study was to gain an understanding of how projected changes in our nation's population, plus demographic, household and market trends will impact our development requirements for the future. That is: how many new homes, schools, parks, libraries, shopping centers, hospitals, office buildings, industrial complexes, etc, will we need to accomodate future growth?

First, let's start with the 'engine' that's driving the need for future development in the US:

The US population is growing. This is due to:

* Extended life spans (people are living longer)
* New births
* Immigration (legal and illegal)


U.S. CENSUS BUREAU PROJECTIONS:

Year..... Population...... Cume Increase...... Cume % Change
2000...... 282Million.......... ---------------------------------
2010...... 309Million........... +27Million ............. +10%
2020...... 336Million...... .... +54Million ..............+19%
2030...... 364Million........... +82Million ............. +29%

Summary: Between 2000-2030, the US population is expected to grow by >82Million new people (a 29% increase!).

According to the Brookings Institute study noted above:

* By 2030, total "built" square footage in the US (including residential, commercial & institutional, and industrial square footage combined) will need to increase by 42% to accommodate the projected new population growth. That means adding another 127 BILLION square feet of buildings.

* By 2030, approximately 27% of previously existing square footage will need to be replaced. That means another 82 BILLION square feet of re-development building.

* All told, this amounts to 209 BILLION square feet of total development needed between now and 2030.

* Most of the new square footage will be residential space (79%). That's over 100 BILLION square feet of new homes.

* Total projected cost of this new "Rebuilding of America"? $25 Trillion Dollars!

The bulk of the $25 Trillion Dollars will be spent in developing 10 major metropolition regions, which the Brookings study calls "MEGAPOLITANS":

Source: "The $25 Trillion Land Grab" article by Paul Kahlia (Business 2.0 Magazine).
Click on the image below for a copy of the article.

1. CASCADIA: Will encompass land from Seattle to Portland. Vast quantities of cheap, prime greenfield surrounding Seattle, Portland, and Eugene give the Northwest megapolitan explosive growth potential. By 2030 the three metro regions will be intertwined.

2. NORCAL: Will encompass land from San Francisco to Sacramento plus the Central Valley. The action is moving east from the Bay Area: The Sacramento metro region will build more housing and office space in the next 25 years than any other Western megapolitan city except Las Vegas.

3. SOUTHLAND: Will encompass land from Los Angeles to San Diego in the south thru the Inland Empire to Las Vegas in the east. Trade with China through the country's largest port, Los Angeles, will fuel a boom in logistics, warehousing, and distribution centers for companies like Target. New military and space programs will do for the Southland what the Internet did for NorCal in the 1990s.

4. VALLEY OF THE SUN: Will encompass land from Phoenix to Tuscon. This is the smallest megapolitan, but the one with the greatest supply of raw, buildable land at the lowest prices--one reason it will soon be the fastest-growing metro region in the country. The big draw: a Palm Springs lifestyle for the masses at a substantial discount.

5. I-35 CORRIDOR: Will encompass land from San Antonio to Dallas to Kansas City. No region better captures and caters to the Latino population boom. A new generation of Hispanic business owners and industrialists will drive the growth, and the area will become a magnet for foreign firms trying to cash in on the U.S. Latino market.

6. GULF COAST BELT: Will encompass land from Houston to New Orleans. Hurricane Katrina will for decades exaggerate a divide at the Texas-Louisiana border between the region's richer western section and the poorer eastern one. Surrounding megapolitans will enjoy spillover growth because of the Gulf Coast Belt's higher risk premium.

7. GREAT LAKES HORSESHOE: Will encompass land from Chicago to Detroit to Pittsburgh. Hit hard by manufacturing's decline, the constellation of Northern industrial cities is morphing into a service-economy region and will draw a flood of immigrants.

8. ATLANTIC SEABOARD: Will encompass land from Boston to New York City to Washington DC. The country's most heavily populated megapolitan braces for another boom. Where will most of the development go? Up: Urban infill will outstrip suburban growth.

9. I-85 CORRIDOR: Will encompass land from Raleigh-Durham to Atlanta. The 410-mile stretch from Atlanta to Raleigh is fast becoming a contiguous strip of McMansions and McDonald's. As textile manufacturing fades, consumer banking in Charlotte, telecom in Atlanta, and high-tech in the Raleigh-Durham Research Triangle drive the growth.

10. SOUTHERN FLORIDA: Will encompass land from Tampa to Miami. The state posted the nation's highest job growth in 2004, as baby boomers from the North poured in to take advantage of the job market and climate. Land scarcity will drive urban growth.

BONUS: UTAH 'MINIPOLITAN': This is my own addition to the $25 Trillion Land Grab markets. Utah is experiencing tremendous population and job growth and needs to be added to the list.

How can YOU profit from the 'Rebuilding of America'?

Well, I suggest that you find a way to participate financially in the development process, particularly in the 'Megapolitans & Minipolitan' geographies listed above.

Personally, I am investing in a company that specializes in real estate development.

If you would like to learn more about what I'm doing, click on the image below:

That's it for now. See you next time! Retirement Wiz (email me at: johnha7@yahoo.com)

How to avoid running out of money in retirement

I just came across a very informative report that I'd like to share with you today. It's called "The 15-Minute Retirement Plan: How to avoid running out of money when you need it most", prepared by Fisher Investments.

For a FREE copy of this report, click on the image below:

Here's a brief summary of what I believe are key points in this report, plus some of my own thoughts on the subject:

Running out of money is one of the worst things that can happen to a person in retirement. You might work your whole life saving for your future and then find out that you don't have enough money to last for the duration of your life.

To avoid this happening to you, there are several key factors that you need to consider:


1. The length of time that you will need to save for. Many people underestimate their life expectancy. In 1952, the average lifespan was 68.6 years. In 2006, that had increased to 77.8 years. And, with continuing improvements in medicine and healthcare, it's expected that life expectancy will only continue to increase.

What does this mean to you? Expect to live a long time and build this into your savings plan for retirement. Below is a 2006 life expectancy table from the IRS to help you with this.

Age.....Life Expectancy
51-----------84.3
55-----------84.6
60-----------85.2
65-----------86.0
70-----------87.0
75-----------88.4
80-----------90.2
85-----------92.6
90-----------95.5


2. The effects of inflation. Many people believe that if they're earning 10% per year on their portfolio, that they can withdraw 10% per year without reducing their principal. This isn't correct. They forget to take into account INFLATION, which historically has averaged 3% per year. So the real earnings for their portfolio is just 7% per year (10%-3%=7%). If they're withdrawing 10%, they are actually reducing their principal every year.

More on inflation: it has a compounding effect on your cost of living. If you need $50,000 per year today to cover your living expenses, in 20 years you'll need $92,000 to keep the same lifestyle. In 30 years you'll need $125,000. You get the point.

3. The amount of money you withdraw from your retirement portfolio each year. The amount of money that you withdraw each year obviously will affect how long your money will last. Here are three scenarios based on an average 10% annual return on a $1 million portfolio over a 30-year time horizon, adjusted for inflation:


* Withdraw 10% per year: the portfolio will last approx. 18.2 years
* Withdraw 7% per year: the portfolio will last approx. 24.2 years
* Withdraw 5% per year: the portfolio will last approx. 27.9 years


4. The makeup of your retirement portfolio. In particular, if you're heavily into stocks, you must take into account the volatility of the stock market. If you need to take 10% withdrawals each year and take it in a year when the market and your portfolio are way down, you could significantly cut into your principal. To illustrate: if your portfolio has declined 20% this year due to a stock market downturn, and you withdraw 10%, you'll need your portfolio to grow 39% next year just to get it back to even.

What can you do?

I recommend that everyone take a good look at raw land development investments for their retirement portfolios.

Here's why:

Though nothing is certain with any investment, raw land development is one of the most lucrative investment vehicles available to investors. And that includes stocks, bonds, commodities, other real estate products, etc. Professional land developers commonly increase the value of their raw land investments by 200-500%. And it can be much higher. (I consider that pretty lucrative.)

These investments are typically secured by the value of the land being developed. This is in contrast to stocks where there is really no security at all.

Land developers do not rely on market appreciation for their profits, unlike residential real estate. Instead, they CREATE value by taking raw land, obtaining government permits and approvals to rezone the land so it can be subdivided and built upon - then they resell these newly approved lots to production builders for typically 2-5 times more than the land developer paid for the land. So, there is typically far more stability and much less volatility.


To learn more about raw land development investments, click on the picture below:

See you next time! Retirement Wiz (e-mail me at: Johnha7@yahoo.com)