Land purchase advice needed

[Tororider]

Don't dip into your emergency fund! Dave Ramsey will come after you.

I wasn't going to bring up Dave Ramsey, but since I just finished his book I figured I would throw this out. Get a 15 year fixed if you can afford it, he keeps saying rates should be right around 5%. Don't pay points or origination fees as it is just pre-paying interest. Therefore the 5% 15 year fixed is for a par quote, no point or origination.

 

[Podunkadunk]

I'm kicking myself for 2 land deals that I missed out on. The first was 27 acres in a beautiful area of Delaware Township NJ in 1996, I offered 135k and it sold to someone else for 145k. Of course I could have found the extra money and met that deal, but I decided to only go so far... the person who got that land put a 6000 sf McMansion on it and is now bankrupt. Deal 2 was a year later, 37 acres for 120k, Franklin township, half cornfield, half swamp, but quiet, convenient location, but I was scared by a set of looney neighbors who told me that it was their land and they would kill me if I tried to run them off. They turned out to be nutjobs who were just renting the house next door and their landlord [with the sherriff] had to, you guessed it, run them off. So 3 years ago I took the plunge and bought the place I'm on now for a LOT more money. Moral: Do it now and don't have regrets, as long as you can actually afford to do it.

Financing, I think, is going to get better. There is a lot of money looking for a home, and there will be more later. I'm seeing 4.875/30yr fixed mortgage rates here and Jim Cramer [if you can stand him and his show on CNBC] yelled about 3.5% rates in a few months. By the time you work up a deal with the seller, get lawyers to do their thing, it should take a few months and you will have cheaper money.

If you can get land that will make you money, like Robert's example, all the better. Plant an orchard on that land? Xmas tree farm? Fence it and rent to an organic veggie farmer? If you can get it to pay for itself then it's like no risk at all. Of course, as soon as I can figure out how to monetize my land, I'll let you know how to do it!

Basically, if you want it, and it makes financial sense, do it. You'll be kicking yourself forever if you don't.

[my 2 cents]

Thanks for the post. You make a lot of sense and as with several other posters in this thread, you all say the same thing: Don't miss the opportunity. Well, if I have to eat squirrel, I'm going to do everything in my power to get that piece of property. As someone also stated, unless you live in Hawaii or Iceland, there isn't anymore land being produced!

The land owner wants to wait until after the 1st of the year to talk details. He just doesn't want to have to do business over the holidays. I can see his point and like you say, the rates will fall even more. By that time I'll have the details hammered out.

Thanks guys, your posts showed a lot of insight and wisdom.

Podunk

 

[spikegomez]

If I wear be in your side I would consider the local bank... this could take more convenience...


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A cool idea from Busby SEO Test

 

[riptides]

Thanks for the post. You make a lot of sense and as with several other posters in this thread, you all say the same thing: Don't miss the opportunity. Well, if I have to eat squirrel, I'm going to do everything in my power to get that piece of property. As someone also stated, unless you live in Hawaii or Iceland, there isn't anymore land being produced!

The land owner wants to wait until after the 1st of the year to talk details. He just doesn't want to have to do business over the holidays. I can see his point and like you say, the rates will fall even more. By that time I'll have the details hammered out.

Thanks guys, your posts showed a lot of insight and wisdom.

Podunk

Be firm in your dealing and low-ball the price. You can always go up, but it is hard to come down.

Good luck!

I am waiting on my 3 percent mortgage from the new federal banking system, personally.

 

[kthompson]

You are not dealing with new autos where if you not able to deal with one dealership you can move to the next one. It is very easy to offend some sellers by the way you approach them. That is one advantage of using a real estate agent as they can often keep personal feelings out of it. If you are dealing directly and it seems you are and already are having good conversations with the seller: I would try to know what land is selling for (understand the flat market but some is selling or has) and have a strong idea on what I think it is worth on the open market and then what it is worth to ME. Since you are asking him to cut it, how does that affect the remaining property? Are you getting the road frontage leaving the balance little if so you will pay higher per acre. Be very fair. Let him know that. You should be able to find out what he paid for it and that may also give you some idea.

If it were me I would ask him to name the price. It does not matter what he names remain calm and very politely say, that is little more than I thought it would be. Can you help me understand that amount? You show respect in many ways and yet let him know where you are price wise, want it for less. Even if his price is cheap, still good advise so later he does not think he could have gotten more from you. Think on that if you must. If you offer something for sale and the person says OK, you wonder how much more could I have gotten. You want a good relationship with him if he will be financing it as who knows what may happen and also he still holds adjoining land.

He may be wanting to wait until the first of the year for tax reasons. May have nothing to do with Christmas or New Years or then it may. I have no idea but YOU check with an accountant on capital gains and find out for sure how is the best way for him to sell to you. He may need at least enough cash out of the sale to pay capital gains taxes or he may still have a mortgage on it or anything that he may not wish to share but has to have the cash for. Information on what works best for him should show him you care about what works for him also. It is not what he grosses, only what he nets he can spend.

As to the point of buying it all, regardless of whether or not you can afford it, that does not mean you would benefit from it. Know a builder who bought about 50 acres down the road from my house and he would be so happy had he never seen that land. It can happen to anyone.

 

[Flatheadyoungin]

very good advice........i didn't want to offend my guy by low balling him......he did wind up paying for the survey......

agreed on the taxes.......my seller has another pc of land that my wife's brother is interested in......the seller said, "well, i'm in no hurry and will probably wait until next spring to deal with it since i just finished up on your's......." it seems like you are allowed one sell without capital gains or something, so i'm sure that is why he is interested in selling next year...

when my seller came in town, we took a rhino, road around the property, walked it and talked.....that's when the ice started to break........he knew what i intened to do with the property and i knew some of his positions.....

i pay an aboslute fortune in interest (even with a low rate you will) but i'll tell you, i love to walk my land and look at everything......it makes me feel at peace...

if everything goes to pot, they can come and get it.....even though i'd do everything in my power to keep it....even become a squatter

You are not dealing with new autos where if you not able to deal with one dealership you can move to the next one. It is very easy to offend some sellers by the way you approach them. That is one advantage of using a real estate agent as they can often keep personal feelings out of it. If you are dealing directly and it seems you are and already are having good conversations with the seller: I would try to know what land is selling for (understand the flat market but some is selling or has) and have a strong idea on what I think it is worth on the open market and then what it is worth to ME. Since you are asking him to cut it, how does that affect the remaining property? Are you getting the road frontage leaving the balance little if so you will pay higher per acre. Be very fair. Let him know that. You should be able to find out what he paid for it and that may also give you some idea.

If it were me I would ask him to name the price. It does not matter what he names remain calm and very politely say, that is little more than I thought it would be. Can you help me understand that amount? You show respect in many ways and yet let him know where you are price wise, want it for less. Even if his price is cheap, still good advise so later he does not think he could have gotten more from you. Think on that if you must. If you offer something for sale and the person says OK, you wonder how much more could I have gotten. You want a good relationship with him if he will be financing it as who knows what may happen and also he still holds adjoining land.

He may be wanting to wait until the first of the year for tax reasons. May have nothing to do with Christmas or New Years or then it may. I have no idea but YOU check with an accountant on capital gains and find out for sure how is the best way for him to sell to you. He may need at least enough cash out of the sale to pay capital gains taxes or he may still have a mortgage on it or anything that he may not wish to share but has to have the cash for. Information on what works best for him should show him you care about what works for him also. It is not what he grosses, only what he nets he can spend.

As to the point of buying it all, regardless of whether or not you can afford it, that does not mean you would benefit from it. Know a builder who bought about 50 acres down the road from my house and he would be so happy had he never seen that land. It can happen to anyone.

 

[SnowRidge]

Last time I checked, you have to be cautious selling land that you subdivide out of a larger piece. If you aren't very careful, the IRS will label you a developer, and any gain will taxed as ordinary income, versus the more favorable capital gains rate.

 

[Ridgewalker]

I love to walk my land and look at everything......it makes me feel at peace...

Exactly! I can feel the stress starting bleeding away as soon as I pull up to my gate. Plus I always find something cool it seems, the last thing I found was an old logging road.

To the OP: Grab that land! You will never regret it!

 

[Tororider]

You are not dealing with new autos where if you not able to deal with one dealership you can move to the next one. It is very easy to offend some sellers by the way you approach them. That is one advantage of using a real estate agent as they can often keep personal feelings out of it. If you are dealing directly and it seems you are and already are having good conversations with the seller: I would try to know what land is selling for (understand the flat market but some is selling or has) and have a strong idea on what I think it is worth on the open market and then what it is worth to ME. Since you are asking him to cut it, how does that affect the remaining property? Are you getting the road frontage leaving the balance little if so you will pay higher per acre. Be very fair. Let him know that. You should be able to find out what he paid for it and that may also give you some idea.

If it were me I would ask him to name the price. It does not matter what he names remain calm and very politely say, that is little more than I thought it would be. Can you help me understand that amount? You show respect in many ways and yet let him know where you are price wise, want it for less. Even if his price is cheap, still good advise so later he does not think he could have gotten more from you. Think on that if you must. If you offer something for sale and the person says OK, you wonder how much more could I have gotten. You want a good relationship with him if he will be financing it as who knows what may happen and also he still holds adjoining land.

He may be wanting to wait until the first of the year for tax reasons. May have nothing to do with Christmas or New Years or then it may. I have no idea but YOU check with an accountant on capital gains and find out for sure how is the best way for him to sell to you. He may need at least enough cash out of the sale to pay capital gains taxes or he may still have a mortgage on it or anything that he may not wish to share but has to have the cash for. Information on what works best for him should show him you care about what works for him also. It is not what he grosses, only what he nets he can spend.

I agree, you don't want to offend the guy if you already have a good relationship with him and you will be neighbors for the foreseeable future.

 

[MossRoad]

There was a funny letter in our newspaper's Voice Of The People section today regarding mortgages and the auto company bailout...

"Instead of bailing out the auto companies, how about the government pays off my mortgage and I promise to buy two new cars?"

I liked that one.

Podunk,
Good luck on your land dreams. I hope it pans out in your favor.

Everyone else,

The emergency fund we were talking about is not for land grabs!

It is there in case you lose your job, income, get laid up, house fire, etc... NEVER SPEND IT ON ANYTHING ELSE!!!