Real Estate

Space is unclaimed. Nobody owns it and nobody has jurisdiction over it.

Ownership always starts with a claim by possession. From then on it's sold or granted to new owners. Title is used to resolve various implications. Resources can be taken from unclaimed land. Once owned, others must come to term with the owner for his/her resources.

I have a model to present, but it's not the only possible model. I think it has many advantages over other models. The first is that it fully finances colonization allowing average individuals (even us poor) to take part at current costs (yes, even for the poor) beginning now (well, that's for another post.) With a good credit rating and a bank mortgage it could cost nothing down and be profitable for the bank so start packing! Well there are a few minor things that have to happen first and we'll get to them. Not everybody has to agree to this plan for it to work. They can follow there own plans which should have no impact on this one.

It starts with a group of people all agreeing to a settlement charter. All members of that charter agree that individuals can each make only one claim of one square kilometer of land per person by possession (they have to live on the rock but not permanently... no slavery!) If you or a corporation wants more land it has to be bought from owners through free trade. Eminent domain will not exist because that violates the absolute ownership of the charter.

Why one square kilometer? Because it is not only reasonable but it is enough to fully finance the trip and provides a lifetime of income. We don't need a welfare state. How?

Everyone that agrees to the charter may have a claim registered and enforced by all other members. They divide their property up into plots for resale (Planet Plots? Yes, you got it.) Mars for example would allow the first 144 million colonists to each claim their own one sq. km. plot.

Typically about 81% of a km^2 claim could provide plots (multiples of a quarter hectare) with all plots having at least 50 m. of frontage and/or perimeter road access. That's up to 200 plots for resale from a single claim. A single developed hectare plot could support a dozen colonists (three Zubrin 50m^2 hobby farms and a 50m^2 multilevel habitat with power, water, food, air, sewage, etc.) Assume it takes a year of labor to develop each plot... that's a lifetime of income by itself. So now we consider the bank mortgage for the trip.

Pick a number to pay for a total package that includes transportation to the surface and fully developed home when you get there. Let's say $40m per person as a reasonable example (this number DOES NOT MATTER.) To fully recover this cost (break even is 1.24% above cost per hectare) we agree to pay the bank one million dollars per hectare we sell for the first half of our claim within 30 years (a typical mortgage period in my youth.) So the bank gets a 25% return over that period (but normally in less time than the mortgage period as the seller has an incentive to sell property ASAP to get to the point of not giving up a million dollars in profit on each sale.)  If you default the bank get the unsold remainder of your km^2 claim. They don't have to charge you a single penny down for this deal since they will receive one million dollars from the previous colonist that sells you a plot as part of this travel package. They could require some down payment to qualify buyers but it's not actually needed (I would think traveling to another planet would be enough proof of commitment.) This seems like a good deal for the bank. Is it a good deal for the colonist (both seller and buyer?)

The buyer is going to need a habitat to live. Assume it takes a year to build that habitat. It's better to have that happen before the buyer arrives (actually, before they leave... you don't want that kind of surprise.) The cost of materials are going to be the same either way so that's a wash. You might save 2% on your ticket, but then the bank would have less incentive to loan you the money if they don't get that immediate mortgage payment from the seller. Seems like a win for the buyer.

The seller is the big winner. Suppose a couple gets an $80m mortgage package (they are $100m in debt) to go to mars and they claim their two sq. km. They get two habitat plots, one to live in and one ready for immediate sale which they sell for $1.5m (the bank doesn't get any of this, it's not part of the land claim mortgage.)

Cost to develop a half hectare plot? They hire two laborers to work with and finish a half hectare (one habitat and one farm) plot in six months: Sale price ($1m) - bank  ($500k) - labor ($100k) - material ($200k) = profit ($200k) - labor opportunity cost ($100k) = net profit ($100k)

As they accumulate wealth they can develop property at a faster rate than two per year and pay off their mortgage in 15 years (the bank likes that!) They've made a comfortable living and now have about $70m worth of unencumbered property to do with as they will. All for perhaps $100k down.

It's very likely they will also have started up a company or two to produce needed mars ISRU items and may even help finance new colonists to provide labor for their own ventures on mars.