Land flipping occurs when an individual or group ( usually a group)
buys a large area of land and then attempts to increase the value of that
land usually by falsified valuations.
One of the best known examples of land flipping is of course Whitewater.
The land flipping usually takes the form of a number of transactions occurring in the
same area and can usually be detected by the following:
* the same person starts out with the land and ends up with the land after numerous
transfers to others
*the land continually increases in price - in other words no losses are recorded.
*if capital gains tax rules are applied the gains experienced by individuals are always below
the level at which capital gains tax applies.
*the same lawyers are used for all transactions and there is usually some kind of conflict of interest.
Land flipping is a serious problem as it inflates the value of land making it generally unavailable for genuine
farmers for example. In a residential setting it increases the cost of buying homes thus putting home ownership out
of the reach of many. It also increases homelessness as it increases the costs of buying rental property thus
increasing rents.
It could be argued that even though the price is increasing the purchasers are genuine thus
reflecting a real demand. However land flipping usually involves "straw" men or pretend purchasers who are basically
using the one large hunk of cash and putting it over the same large area of land.
The large hunk of cash often comes drug dealing and other criminal pursuits so any lawyer who is engaging in this
type of activity has a big problem and as in some country areas there is probably only one
lawyer the whole area has a problem as the main land holder ends up being the Mafia.
Land flipping is therefore related to pyramid schemes in that the same money is being churned
around to make it look like there is real activity in land sales. Like pyramid schemes many innocent purchasers
get hurt as inspired by the seemingly large prices being received by the scamsters in the flipping scheme, they buy in
at inflated prices. It is therefore very important that intending purchasers question the reality of the valuation figures
given by valuers and even government valuation departments.
Why do large groups of people become involved in this sort of land flipping activity in particular areas? One of the main
reasons is a form of insider trading. Let us imagine for example that a large corporation in New Zealand is becoming interested
in buying a large agricultural concern in Tasmania. The company will probably know for some time ahead that it is interested. In
spite of the normal safeguards many executives know that this is to occur and know that land prices will increase.
There are extraordinarily complex intelligence relationships in the financing and real estate businesses (See Federal Police's Operation Tambo).
These relationships blossom when there is to be a big investment of corporate funds. Vested local interests therefore see the benefit in
land flipping as the pay out will occur when the big dollars arrive on-shore and the land can be sold for an inflated profit.
Land flipping also becomes more likely when there is a problem in the alienation of local land. That is paradoxically the land flip is
more likely to occur when a large original land grant is being held by a corporation or absentee landlord and the land holder does not
want it to become obvious that a large area of land is not being released for sale. The public generally not liking absentee land holders.
In this case the flipping is used to disguise the fact that the land is not on the market under any circumstances. In these areas the large
area of land will be held by an enormous number of straw men who appear to be real land owners, who have some historical connection with the
hidden corporate land holder and who will trade land between themselves.
To some extent these hidden land holdings can become made apparent by placing an outline of the original grant over present day
holdings. The present day holdings will reflect the outline of the original land grant. In other words, there are no holdings across the
boundaries of the original land grant indicating that there is a constraint on the alienation of the original land grant.
