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Is land a good investment?
Posted on 9/21/14 at 1:34 pm
Posted on 9/21/14 at 1:34 pm
I posted earlier regarding some help on a land loan. I should have been more specific on what I am looking for. I want to buy some investment property that I could make money on down the road. I found about 45 acres for sell, it is in prime hunting area as well. I am 24 and have pretty good income but spend a lot of time on the road for work so I don't own a home. I was thinking about putting a little down (less then 20% if do able) and finance over 15 years, that would give me a pretty low note. This land is selling for $60K its recently been cut (reason for low price only $1400 an acre). My thought is it will give me a great place to hunt and a great investment down the road. The property is half hardwoods and half clear cut but recently re-planted. I figured after another 15-20 years I can sell the timber off the land to make some money.
What are y'alls thoughts? Is this a good investment or no?
What are y'alls thoughts? Is this a good investment or no?
This post was edited on 9/21/14 at 4:08 pm
5
Posted on 9/21/14 at 1:41 pm to GeauxTime9
Posted on 9/21/14 at 6:32 pm to eng08
Afternoon bump, need some help from the guys on the MT.
Posted on 9/21/14 at 6:46 pm to GeauxTime9
quote:
Is land a good investment?
In general terms, yes.
In this specific case, I have no idea.
I say yes in general terms, because you are likely to get a good investment return relative to your risk on land, unlike what you would get with other asset classes such as gold or residential real estate, which tend to generate sub-competitive returns on investment. (But people hold them for other reasons--in the case of gold, as a small hedge set-aside against the possibility of catastrophe, and in the case of residential real estate, as part of a bundle of a land investment + a long-term depreciating consumer good built on top of it.)
Since equity and bond returns don't have very good long-term return projections at the moment, it seems as though rural land investment would be a good idea, but on the other hand (to use economist weasel words
), bubbles do tend to form in agricultural real estate in times of low interest rates. Personally, I would argue that it was the Hooverite policies of promoting farm credit (see e.g., the Agricultural Credits Act of 1923) that was the direct cause of the stock market crash and the subsequent Great Depression. Hopefully some other poster will come in with more specific knowledge about buying hardwoods hunting land for $1400 an acre.
Posted on 9/21/14 at 7:00 pm to Doc Fenton
quote:
Doc Fenton
Thanks for the help. I am just green to this, I am right out of college and this would be my first big purchase (outside a vehicle).
Posted on 9/21/14 at 7:23 pm to GeauxTime9
Mississippi I'm guessing? What's the elevation? It seems like you can't go wrong at that price (assuming it's decent land for hunting).
Posted on 9/21/14 at 9:52 pm to GeauxTime9
What do you think would cause it to increase in value? It is close to something that might give rise to commercial or residential development one day? Might there be good oil underneath it (make sure you get the mineral rights if you can).
The planting has been done, that's a plus. And if you like to hunt (which it seems like you do) then there is value to you just for that.
I would think undeveloped, remote land isn't something that is sold everyday, so you need to make sure you won't be in a situation where you are forced to quick sell.
Try to talk to someone maybe at the rural bank or whatnot to get a feel for what land is going for per acre in that area.
The planting has been done, that's a plus. And if you like to hunt (which it seems like you do) then there is value to you just for that.
I would think undeveloped, remote land isn't something that is sold everyday, so you need to make sure you won't be in a situation where you are forced to quick sell.
Try to talk to someone maybe at the rural bank or whatnot to get a feel for what land is going for per acre in that area.
Posted on 9/22/14 at 8:03 am to GeauxTime9
quote:Buy low. Sell high. Right?
Is land a good investment?
(1) Buy low- does not strictly represent price in dollars.
It represents market & value. Something can seem cheap in dollars, but actually be a poor market value. How long has the property been offered at current price? If it's been out there a while, ask yourself why. Is length of time on market d/t Pricing, Restricted buyer pool, Pending risk? Ironically, poor land and property investments tend to occur because of tangibility. "Wow, I now own all this!" Only when you look to sell at some later point does the prudence of the investment manifest. With stocks, REITs, bonds, etc., the initial focus is often more oriented toward the "later point".
(2) Interim use - If you buy land now, and will get thousands of dollars of pleasure use out of it, obviously that should receive consideration.
So if you sell at little or no profit later, was it a bad investment? Maybe, maybe not.
Can the land generate income to defer costs? You mentioned logging. Straw, hay, crop leases, hunting leases, etc are potential options. Assess those conservatively.
(3) Sell high - LSUFanHouston's post (above) is on the mark. If liquidity is or might be an issue, land is not the best option.
Overall there are many connected politicians, developers, etc. combing the space. They've not made the purchase. Do you know something they don't? Not being facetious. e.g., Interim use might be that "something". But if you're basically looking to flip the property, think long and hard.
This post was edited on 9/22/14 at 8:38 am
Posted on 9/22/14 at 8:23 am to GeauxTime9
For the past 70 years or so land has been a great place to put money in growing (this is key) cities/towns in the US. I don't think this will be true on as broad of a basis going forward as USA demographics aren't quite as rosy going forward as from the 1930's to the early 2000's.
There will likely be more people that die than real estate buyers starting in the next 10 years or so. Location will be very important from a return standpoint.
There will likely be more people that die than real estate buyers starting in the next 10 years or so. Location will be very important from a return standpoint.
This post was edited on 9/22/14 at 8:25 am
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