silly advice. during the recent real estate boom land was probably the highest return investment you could have made. i bought land that increased 200-300% in a year all around florida. home appreciation could not touch these returns.
these days land is getting very cheap. no need to buy worthless undevelopable parcels. you can buy buildable land from desperate sellers that bought at the top. just keep in mind land will most likely be a long term investment and you will be paying property taxes on it…until the boom starts all over again. which is going to be a long time from now. i would say if you have a 10 year plus time horizon you are ok. if you expect to flip forget it, cheap land is a bad short term investment.
What is your opinion on “Land Liquidation” offers. For example: 5 acres-$1000,$2000,or$3000 per acre($100, $200, or $300 down w. monthly payments)-near wildlife refuge or a lake. Campsites-$725 and up-($25 down/$25 per mo.)Are there any precautions that one should take before purchasing property like this? Are they often scams and are there tricks to them?
Posted by Rich-CA on January 28, 2008 at 10:36:42:
I only partially agree with Bill and RR and agree more with Mike. Buying land is somewhat speculative if you are not planning to build yourself in the near term.
For example, my wife bought 21 acres in Hawaii near where Hilton had gotten most of the approvals it needed to build a new, high end resort. Unfortunately, the remaining 10% of the approvals took another 3 years and the Japanese tourism level crashed, taking the viability of the resort with it. The County even lowered their valuation of the land BY HALF as a result. That was 15 years ago (may be longer) but when someone tells you its a long term investment, that’s what they mean. Measured in decades if things do not go as projected. If you buy raw land, go look at it. Make sure the location is desirable - lake front instead of three lots back, ocean front but not on a cliff being undermined by the normal wave action that’s ready to fall into the ocean. Make sure that in a very wet period the lot is not part of the lake or the local holding place for runoff from surrounding lots.
Then you will have to insure it. Because people get hurt on land and sue the owner. You will have to check it out from time to time to make sure nobody is setting up for adverse possession of the land.
Meanwhile, with no utilities and roads, you have something that can only cost you money: taxes, insurance, inspections. And you cannot rent it anyone. Who is going to pay you? For decades, if things do not go as you plan. Like the people who bought lots during the RE boom and now have no buyers for the houses that they wanted to build on them.
Follow the advice of “RR”…if you do not have a valid use for the land in the next six months…PASS.
If you do…BEFORE…you invest you had best find out about access, water, electric, zoning, soil stability, PLUS lots of other things that can intefere with and cost lots of $$$ or STOP you from utilizing the land at all.
The bit about “Near wildlife refuge” is a red flag to me…most wildlife refuges will not allow permanent building on them…they are national in nature and open to all the public.
In most cases you never want to purchase vacant land unless you plan on building on it or utilizing it in some other manner right away. Buying a piece of vacant land thinking that you will someday build a getaway vacation home or something like that seems like a decent idea, but most peoply who buy in these cases don’t ever build on them because future circumstances, relocations, loss of job, health or financial hardships, etc., get in the way and they never build on it. Meanwhile you are paying a mortgage on this site plus property taxes twice a year for a site that you aren’t currently using and may never use. In addition, if you decide to sell the lot or worse, need to sell the lot for financial reasons, the lot may prove difficult of impossible to sell. Most vacant lots that people put on the market to sell, unless it is in an area that is growing rapidly, sit on the market for YEARS without ever getting any offers and the value of the land, in most cases doesn’t appreciate in value. Unless of course the area is becoming a hot area.
Likely, renting the lot is not going to happen because the land you are buying may be far removed from the lake or other local amenities and most campers will prefer to camp in established campsites.
The other precaution, assuming that you are considering someday building a home on this site, is to investigate cost to build on this site. Can you get public utilities their, will the site accomodate a septic or other waste system, are there restrictions on building there (if it is in a national forest area there may be), etc. You may find that buying an already built home in the area is less expensive than building your own.
So if I didn’t dissuade you enough, good luck, but my suggestion is that you clearly understand why you want to buy here, and what your intentions and timeline for using the site are. You should also contact other homeowner’s who have purchased land in this area prior, hopefully from the same company, and ask them if they regretted their purchase. The company you buy from should be able to provide you a list of previous buyers. If they are unwilling, watch out. Of course they may only supply you with people who will give glowing recommendations.