Posted by David Krulac on January 13, 2011 at 17:31:57:
two stories both positive…
Here in PA, the latest and greatest is Mascallus Shale, heavily laden with natural gas, perhaps the largest deposit of natural gas in the world. Extration is the problem, the gas is a mile deep in the ground. But there is a mad rush to get hands on mineral rights.
a relative told me the story where his father bought 100 acres of farm land for $6,000, obviously many years ago. He has an opportunity to buy an additional 100 acres adjoining, but instead used the second $6,000 to buy a tractor. That tractor has long gone to the scrap yard in the sky, whikle the value of 100 acres is worht a lot more.
I’m not saying to NOT buy land, what I am saying is don’t buy land in this economy and market and expect to flip it.
Posted by LifeofBrian on January 20, 2011 at 01:00:24:
I made millions flipping raw land when the real estate market was hot in Florida. Everyone was flipping condos but land was where the real insane appreciation and $$$ was. Just wait for the next bubble and dive right in. You just might have to wait 20 years or so. These days I see the same lots I sold in 2005 selling for 90% less. Ouch.
Posted by David Krulac on January 12, 2011 at 18:41:07:
is the short answer.
I have 4 decades of experience buying raw land, acreage, and vacant lots. Today is the worst time that I have ever seen. Lot sales are much slower than house sales, which are slow most places. The economy, high unemployment and job security and uncertainty of future lay offs or shut downs, has caused most of the public to be purchase shy.
In one area that I’m familar with, the prices are 50% or less off the peak from 2005 and 2006. and on top of that the market ius saturated, there is something like 20 years of inventory on the market at the rate of recent sales.
IMHO, today is not the time to flip properties, and could be the worst time since the 1930s depression.
Prices are way down, and that MAY be a buying opportunity, but if that is your game plan then you should expect a long, no make that a very long holding period. If you buy lots today that you expect to hold 10 -20 years, that MAY be a viable plan.
One universal that applies more now than ever with increased real estate taxes, is that the holding costs of vacant land is ever incr4easing, while the income still remains stuck at zero. Let’s look at that again, increased expenses and no income, wow what a great investment…NOT!
As John has indicated, raw land is the highest risk and highest reward part of the real estate industry.
BEFORE you do anything with raw land…WHAT is your EXIT strategy?
I have worked with lots of MAJOR develoopers in the past and NONE of them bought land to hold. They had an immediate use for it.
In addition to those places that John mentioned, another comes to mind about the land around the Salton Sea in south easter CA…WOW!
You MUST know what the potential is, what the zoning is or can be changed to, what the utilities, water, sewer, electic, etc are or will cost to bring in. NO developer will touch it until he has a vey good handle on thes items plus lots more that he will need to know.
This is one area you absolutely MUST “Investigate BEFORE you INvest.”
Do own research & trust no seller - Posted by John Merchant
Posted by John Merchant on January 11, 2011 at 10:00:32:
Raw land hold is a great but lengthy strategy and should be carefully studied before buying.
Bob Hope and other movie people were famous for this and bought and accumulated $Bs of raw CA land but with $$ they didn’t need for foreseeable future.
Such a buyer learns to be very careful so he’s not aken for a long expensive ride. I once represented a group of gullible investors who were oversold some “Lake Havasu” AZ lots that were so far back in the desert even the vultures couldn’t find them.
And I’ve known of other “resort or lake” lots that were equally disingenuously named, such as Lake LBJ lots, Lake thisorthat, etc. but were so far from the referenced lake the cheated buyers couldn’t even find the lake or resort from their worthless property.
This is the kind of fraud that engendered the Interstate Land Sales Act, one of the earliest consumer protection Fed laws attempting to protect the gullible investor from his money.
Talking to some reputable builders in your locale might find you some deals where you’d buy and he/they’d build or develop and then you’d sell or rent for profit.
Posted by John Merchant on January 13, 2011 at 13:35:27:
I recall an old guy was telling me when he started law practice in '30s he was approached more than once to buy TX prairie land for $1 @ acre as land owner couldn’t even afford his RE taxes.
Sure, you say, that was the days before natural gas production (or demand)and that changed everything so that land did eventually pay off.
But what’s gonna make ANY bare land pay off today?
Posted by Jesse Moranne on January 12, 2011 at 04:36:58:
Hi. Just trying to figure out how I investigate buying raw land. I have some experience buying and selling homes over the past few years. I have always wanted to know about land but havent found much on the topic and forgive me for saying this, but most agents wont tell you the danger of buying. I have seen so many people lied to. Anyone know of any good books on the subject. thanks