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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 5:46 pm to Bayou Tiger
No clear path to cash flow other than timber.
Well he's a lawyer and is talking about forming an LLC and all that jazz. Both of us do pretty well financially, so I don't think either would ever be cash strapped and in need to sell our part of the land. But you never know...
I don't think it's a sentimental reason, but more of a convenience reason. Would have easy access to our tractors and stuff we have already when needed.
He's been looking for land in this part of the parish for about 3 years now.
Well he's a lawyer and is talking about forming an LLC and all that jazz. Both of us do pretty well financially, so I don't think either would ever be cash strapped and in need to sell our part of the land. But you never know...
I don't think it's a sentimental reason, but more of a convenience reason. Would have easy access to our tractors and stuff we have already when needed.
He's been looking for land in this part of the parish for about 3 years now.
Posted on 11/21/13 at 5:52 pm to NC_Tigah
1. I don't think I'd be interested in anything more than timber as a revenue generator. If we ever wanted to raise cattle or anything, we have our parents land that is mostly pasture.
3) It wouldn't be a huge portion of my portfolio by any means. And I don't think the land would depreciate in value...just might not appreciate much.
3) It wouldn't be a huge portion of my portfolio by any means. And I don't think the land would depreciate in value...just might not appreciate much.
Posted on 11/21/13 at 6:15 pm to That's BS
quote:What's that worth to you vs other growth opportunities involving the purchase? That component is a simple personal decision.
I don't think it's a sentimental reason, but more of a convenience reason. Would have easy access to our tractors and stuff we have already when needed.
Posted on 11/21/13 at 6:44 pm to NC_Tigah
Meh, not worth all that much. We could buy a trailer to transport the equipment if needed.
I have no intentions on getting into farming or livestock. I already work a full-time job and don't want an extra "job". Also, I don't hunt or anything, and I don't think I'd want to live that far away from where I work though times only about a 35 min drive.
I've always viewed land as one of those things that'd be nice to have, but don't place a huge importance on it. I want to eventually but a few acres just to have a huge yard and build my permanent home, but probably 10 acres or less.
I have no intentions on getting into farming or livestock. I already work a full-time job and don't want an extra "job". Also, I don't hunt or anything, and I don't think I'd want to live that far away from where I work though times only about a 35 min drive.
I've always viewed land as one of those things that'd be nice to have, but don't place a huge importance on it. I want to eventually but a few acres just to have a huge yard and build my permanent home, but probably 10 acres or less.
Posted on 11/21/13 at 7:31 pm to That's BS
Possibly purchase it and lease as hayfields or cattle grounds? Then you cold reserve 5-10 acres for your homestead/future homestead and make a little money on the rest?
There's also a possibility the property is in the Tuscaloosa Marine Shale that's sort of up and coming. You could lease he land and potentially make money on drilling. I don't know much about it, but it could help pay for he land, too.
There's also a possibility the property is in the Tuscaloosa Marine Shale that's sort of up and coming. You could lease he land and potentially make money on drilling. I don't know much about it, but it could help pay for he land, too.
This post was edited on 11/21/13 at 7:35 pm
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 11/21/13 at 11:18 pm to FelicianaTigerfan
My problem is finding land to buy. Any tips on where to look? Or how these folks buy it before anyone else finds out? They just call the land owners and make an offer?
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 7:26 am to SmackoverHawg
Get in with a land broker and tell him what you want and what you're willing to pay.
Posted on 11/22/13 at 8:00 am to SmackoverHawg
quote:
Or how these folks buy it before anyone else finds out?
95% of the time land like that is offered neighbor to neighbor.
People want to know who's buying next to them.
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
Posted on 11/23/13 at 2:42 pm to Hand
Thanks. I'm kinda in the same boat with some of those reasons you didn't. However it wouldn't be as big of a financial commitment as your $20000 per for 20 acres. My brother is thinking we can get it for about $2500 per acre. I'm still trying to decide. He and I will probably talk about it tomorrow. I'm only interested if it's also his plan to use the land for some sort of income producing means (likely timber).
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