Posted by Sara_CA on December 23, 2010 at 21:00:44:
I like raw development land. I can buy development land
and park my money there for a long many years. Nosy
none-of-their-business family and friends don’t need to
know. I go do other things that are interesting to me,
while knowing that my land is holding value and
appreciating if the economy improves. 7, 10, or 15
years from now my land would have appreciated several
fold. I will then develop the land into a subdivision,
and sell building lots one by one. I will partner with
a reputable developer to do this.
The idea of buying an apartment is good, but it is a
business that needs tending to for cash flow. I can not
just buy it and forget about it for years.
Works for me.
Are there any land buyers familiar with Central CA on
this board? I worry that I may be paying too much.
Help! Thanks in advance.
Residential Development Land in Central CA - Posted by Sara_CA
Posted by Sara_CA on December 19, 2010 at 09:42:01:
Ray,
I am interested in a piece of development land in
Central Calif. Raw acreage in the city’s sphere of
influence area. It sold for $995K in 2006. The asking
price is $400K. I will offer $200K cash. Is this too
much in this market? I intend to flip to another land
banker, or keep for my own.
Thanks for this great site and all who contribute here.
Thank you Ray.
Re: Residential Development Land in Central CA - Posted by ray@lcorn
Posted by ray@lcorn on December 28, 2010 at 16:27:43:
Sara,
I don’t have a clue if that’s a good price in that market, but it sounds like you’ve done some homework.
And I like your strategy below, knowing there may be a long hold time, willing to wait, and no debt. Land must be bought for either immediate development, or cheap enough to justify the long-term carrying costs of taxes and assessments.
However, the eventual value will be a function of development potential, e.g. number of lots or units allowed (residential), coverage ratio (max commercial sq. footage), zoning requirements and development standards (both types). So I’d do some legwork in establishing the by-right (i.e. no zoning change) uses and density to establish what the realistic end-value is on a per unit basis.
As a pure what-if scenario, say the '06 price was the height of the bubble and was double what it’s really worth, the present asking price would confirm that. If you buy at a significant discount from that, the long-term play should pay off, but only if the development potential can be verified.
Well, I would be very careful buying raw land. In my opinion, it’s not a good investment. The rental market in most areas are only going to get better. Why don’t you put that $200K into an apartment property?