Save for Retirement by Buying Land?

Before he became a third-grade teacher, Greg Mason worked in construction. His trade came in handy in 1995, when Greg and his wife, Janet, also a teacher, bought 6 acres and built themselves a house -- literally. They put up a Craftsman-style home on their spread, near Colfax, Cal., 50 miles northeast of Sacramento. Greg paid some friends to help him raise the frame and walls; contractors installed the plumbing and other essentials.

Greg is now eyeing as a potential investment a piece of an adjacent tract that he expects to become available in several years. Given the Masons' equity in their homestead -- they owe $160,000 and think the property is worth $500,000 to $600,000 -- plus their $125,000 in CDs and $140,000 in traditional investments, the couple could pay cash for the land. "I don't want to finance this," Greg says.

The area's growth potential and natural beauty motivate Greg. He believes that as Colfax evolves into an exurb of Sacramento, public water and sewer service will replace the existing wells and septic systems. If so, vacant residential land would become much more valuable. But he also sees investing in land as a solution to his worries that the couple's salaries and their state-funded pensions, 403(b) savings plans and IRAs won't keep pace with California's high taxes and cost of living.

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