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Purchasing Land As Investment
Posted on 5/28/15 at 10:54 am
Posted on 5/28/15 at 10:54 am
The property behind my house is being developed soon, and I was thinking about buying the lot that will be directly behind me to keep it from being developed. I have not gotten the exact cost of the lot yet, but, from what I hear, it is going to be a lot more than I had expected. Is there usually a premium built into the price of a lot in a new subdivision? Can I expect the price to appreciate much?
3
Posted on 5/28/15 at 10:59 am to CubsFanBudMan
It's kind of a craps shoot on a new development. If the builder goes belly up or if the lots are too high, nobody wants to move in. The subdivision next door to ours has a builder that's VERY proud of the lots and houses that he builds. As a result, there are about 10 houses in a 50 house subdivision after 4-5 years. Not to mention that you may have to pay homeowner's dues for the lot, even if you don't have a house on it.
Also try to find out if you have to build on the lot in a certain amount of time. Sometimes builders will do that to ensure that the subdivision gets developed in a timely manner.
Also try to find out if you have to build on the lot in a certain amount of time. Sometimes builders will do that to ensure that the subdivision gets developed in a timely manner.
Posted on 5/28/15 at 10:59 am to CubsFanBudMan
quote:
Can I expect the price to appreciate much?
Not as much as a developed property and you will have real estate taxes that are not sheltered by homestead exemption. It may be a money loser instead of a money maker.
Posted on 5/28/15 at 11:19 am to CubsFanBudMan
Why do you want to do this?
There might be a provision that every lot must have a house built on it within a certain amount of time, or something.
There might be a provision that every lot must have a house built on it within a certain amount of time, or something.
Posted on 5/28/15 at 11:24 am to Layabout
I know there are some builders that are involved in the project, and the first person I found was a builder that would require that he build the house. I then found the developer, and am waiting to hear more from them.
I know that I would be required to pay HOA dues, but I would expect to be able to have the same rights as others (use of pool/clubhouse/etc). My subdivision doesn't have a pool, so depending on the annual cost, this may be a plus.
I'm not sure if the assessor would value the property at the sales price, or something more reasonable, but the property taxes would probably be 1.25%.
I'm thinking, if over the long run, if the property appreciates 3% per year, then it wouldn't be a money loser, not factoring in inflation. It would also be worth it to keep the view, and not have to look at the back of a house when looking out the back yard.
We don't plan on moving any time soon, if ever, so this would be a long term decision, not something to flip in 5 years.
I know that I would be required to pay HOA dues, but I would expect to be able to have the same rights as others (use of pool/clubhouse/etc). My subdivision doesn't have a pool, so depending on the annual cost, this may be a plus.
I'm not sure if the assessor would value the property at the sales price, or something more reasonable, but the property taxes would probably be 1.25%.
I'm thinking, if over the long run, if the property appreciates 3% per year, then it wouldn't be a money loser, not factoring in inflation. It would also be worth it to keep the view, and not have to look at the back of a house when looking out the back yard.
We don't plan on moving any time soon, if ever, so this would be a long term decision, not something to flip in 5 years.
Posted on 5/28/15 at 11:26 am to CubsFanBudMan
I recommend blueboxer1119 from the other thread to be your partner. Sounds AWESOME to deal with. He'll bring his own realtor and Purchase Agreement too!
This post was edited on 5/28/15 at 11:27 am
Posted on 5/28/15 at 11:28 am to LSUFanHouston
quote:
Why do you want to do this?
There might be a provision that every lot must have a house built on it within a certain amount of time, or something.
I want to keep the land behind me undeveloped. I have not had in-depth talks with the developer yet, so I do not know what provisions are in place. If there is a provision that states a house must be built on it within a certain time, then I'm out. I just enjoy not having anyone live behind me.
Posted on 5/28/15 at 11:37 am to GFunk
Sounds like his money is tied up right now. However that 10% penalty will put a big dent in the purchase price.
Posted on 5/28/15 at 12:39 pm to CubsFanBudMan
quote:
If there is a provision that states a house must be built on it within a certain time, then I'm out. I just enjoy not having anyone live behind me.
If your area has online land record filing, you should be able to search for that type of information online. If you are just buying a lot in a subdivision to hold, by the time you pay yearly taxes and association dues on it, you will probably lose money in the long run. If you are buying it to protect the value of your property, that might be a different story. What are you afraid of being built on it that would cause your property value to go down?
Posted on 5/28/15 at 12:57 pm to DingLeeBerry
I don't know if there would be a direct affect to my property value, either up or down. The estimated build cost is $150-$160 per square feet, which would be a nice bump from what houses in my subdivision are going for ($125-$140).
I'm not worried about a mobile home popping up behind me, but do enjoy the nice quietness of my current set-up. There is currently about 300 yards between the back of my property line and the next set of houses, which are alone a busy street. Most of those 300 yards are trees, so I rarely hear traffic from that street, which is bound to change once all of those trees get cut down.
The investment side of the equation didn't pop into my mind until I found out that to price is probably going to be double of my uneducated guess.
I'm not worried about a mobile home popping up behind me, but do enjoy the nice quietness of my current set-up. There is currently about 300 yards between the back of my property line and the next set of houses, which are alone a busy street. Most of those 300 yards are trees, so I rarely hear traffic from that street, which is bound to change once all of those trees get cut down.
The investment side of the equation didn't pop into my mind until I found out that to price is probably going to be double of my uneducated guess.
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