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Message
Land as an investment
Posted on 11/21/13 at 5:19 pm
Posted on 11/21/13 at 5:19 pm
My brother just called about a good deal he came across for about 60 acres of land that actually connect to our parents 70 acres in a rural part of the Florida Parishes. Land was clear cut in early 2000's and has natural growth since then.
He's been looking to buy some land for a few years now and thinks this is a good deal and wants me to go in on this with him.
What are the MB's thoughts on land as an investment means? I've never really looked into buying land so I don't really know much about it's potential for ROI. And I would still be investing about 20% of my pretax income in the market through my 401, 457, Roth, etc. I was planning on increasing my contributions to the market soon, but am now considering using that money for this land now.
I'm 31, engaged, no kids...yet.
TIA
TL/DR version: should I buy some land?
ETA: mineral rights would be included in the sale for what that's worth.
He's been looking to buy some land for a few years now and thinks this is a good deal and wants me to go in on this with him.
What are the MB's thoughts on land as an investment means? I've never really looked into buying land so I don't really know much about it's potential for ROI. And I would still be investing about 20% of my pretax income in the market through my 401, 457, Roth, etc. I was planning on increasing my contributions to the market soon, but am now considering using that money for this land now.
I'm 31, engaged, no kids...yet.
TIA
TL/DR version: should I buy some land?
ETA: mineral rights would be included in the sale for what that's worth.
This post was edited on 11/21/13 at 5:24 pm
10
Posted on 11/21/13 at 5:22 pm to That's BS
quote:
TL/DR version: should I buy some land?
Use inside info to scoop up currently useless land that will rise in price 1000 fold after the project moves forward.
Profit.
Posted on 11/21/13 at 5:29 pm to That's BS
quote:Well, they ain't making any more of it.
What are the MB's thoughts on land as an investment means?
But seriously unless you have a clear path to cash flow on the land, or knowledge of a specific reason that you think it will appreciate in value, you can do better.
And just wait until your brother needs cash and wants you to buy him out of his share for more than you think it's worth.
If there is a sentimental reason that you want to buy the land connected to your parents' parcel, you should have it legally split up between you and your brother at the initial purchase.
Posted on 11/21/13 at 5:41 pm to That's BS
Mineral rights are universally a good thing, but it is hard to give you much more without knowing the specific location and the surrounding area.
Posted on 11/21/13 at 5:43 pm to That's BS
quote:(1) If you can use it to generate revenue -- horses, cattle, agriculture, development, it changes the equation. Think out of the box.
What are the MB's thoughts on land as an investment means?
(2) Land is very illiquid.
(3) In terms of an investment portfolio, diversification is a risk mitigator. If this purchase would comprise a disproportionately large portion of your investments, understand the inherent risk.
Posted on 11/21/13 at 10:36 pm to That's BS
Carrying costs...
Keep them low
Keep them low
Posted on 11/21/13 at 10:40 pm to That's BS
Depending on where it is I may be interested in leasing it if you or your brother buys it.
If I had te spare income all I'd do is buy land
If I had te spare income all I'd do is buy land
Posted on 11/22/13 at 5:32 am to That's BS
Investing in raw, non or minimum income producing land is rarely profitable. It is generally a very speculative investment which will only give you a return if development changes the possible use of the land (agricultural to retail for example). Investing in income producing property or stocks are much better alternatives.
Raw land MAY increase in value over time, but with no income during those years, you usually end up with a negative return due to carrying costs.
Raw land MAY increase in value over time, but with no income during those years, you usually end up with a negative return due to carrying costs.
Posted on 11/22/13 at 8:35 am to That's BS
Overall, considering no other facts, buying land for the long term is a fantastic investment. Don't buy it with any intention to sell for a while. If someone offers you a real good price then hey you did well. But many folks have lost their asses trying to be flippers. Some have made it big, but you don't seem very interested in the trading business.
Posted on 11/22/13 at 10:27 am to That's BS
FWIW be sure to do your homework. If there are bad things (chemicals etc) dumped on the property you could be on the hook for cleanup some day.
Posted on 11/22/13 at 7:28 pm to That's BS
I'm younger... no wife... no kids. I recently decided against purchasing multiple acres waterfront for $20,000 per.
Here's why I wanted it: It's beautiful land. I feel that it's a good deal. Similar property in the area is selling for $30,000 per acre (smaller acreage). I want diversification because 90.00% of my assets is in stocks and funds. I want multiple acres. From a psychological perspective, I want something permanent in my life.
Here's why I didn't: That last reason from above is stupid. I rent. While I could swing the note on the land, building would require reallocation of cash flows that I feel would not be prudent to my long-term financial health. I'm not sure that I want to stay in the area. I have no interest in the maintenance of 20 acres at this age. It would be non-income producing and I've watched one too many fall due to the burden of non-income producing property.
That was my thought process. Good luck with your decision.
Here's why I wanted it: It's beautiful land. I feel that it's a good deal. Similar property in the area is selling for $30,000 per acre (smaller acreage). I want diversification because 90.00% of my assets is in stocks and funds. I want multiple acres. From a psychological perspective, I want something permanent in my life.
Here's why I didn't: That last reason from above is stupid. I rent. While I could swing the note on the land, building would require reallocation of cash flows that I feel would not be prudent to my long-term financial health. I'm not sure that I want to stay in the area. I have no interest in the maintenance of 20 acres at this age. It would be non-income producing and I've watched one too many fall due to the burden of non-income producing property.
That was my thought process. Good luck with your decision.
This post was edited on 11/22/13 at 7:30 pm
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