Profile picture for Kalebgoodwin

Should I buy some land or property?

After reviewing answers from previous questions i have asked on zillow, there is a very small chance i would like to a house in the near future. I still would like to gain some experience in the real estate market, so i decided maybe I should buy some land. 

Can you give me should good information on investing in land and property? 
I also do not know where i should buy land?Any good recommendations, is it hard to buy out of state?

 And do you just put one full payment down or if you can pull out a loan to buy the property? I have heard mixed answers to this question. what do you recommend if I currently do not have much cash, i only have about 11k.

Some other questions are is Land very similar to the housing market, does it usually follow behind with prices, or did it just stay constant in the recent housing bubble?

And lastly what are usually the ROI of purchasing land with under 10 years?
  • May 07 2011 - Riverside
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Answers (6)

Profile picture for DossBucks
Hi Kalebgoodwin,

You have an interesting question. It appears from the earlier posts that it's 0-5. If you are a baseball fan......0-5 will send to towards the "Mendoza line". Ha! 

I agree with everyone.  Land deals can be very tricky and costly. I was a construction lender for many years and even experienced consumers with lots of cash had a hard time with these types of projects.

I'm curious... what did you see or hear that made you think this was a possibility?

Ken
Community West Bank
Santa Barbara, CA
  • May 09 2011
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Avoid land. It is the riskiest and often the worst performing real estate. It's all negative cash flow. 

With land you are totally banking on appreciation while collecting no rental income...fogetaboutit!

$11,000 isn't going to get you much unless you have income to support a purchase. Buy a nice moderately priced property that is already built, in good shape, and that you plan to own for a long long time.
  • May 07 2011
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Do not buy land unless you have a very specific plan to improve the land with a solid exit strategy.  Don't be speculating.

The best way to be investing today is in solid turnkey cash flow investment property.  We have clients as far as Australia and the U.K. buying our properties, and that should be a sign for you!

Good luck,

Marco Santarelli
  • May 07 2011
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Land is the very last thing a naive inexperienced investor should buy. Land pays no income stream, and costs money in taxes, it is purely a speculative play, and based on your question, you have zero experience for this.
  • May 07 2011
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Before you talk with an agent, talk to a financial advisor.  Figure out if real estate, whether a home or land, is right for your overall financial plan.  No agent can answer that question.
If real estate is a good idea for you, consider how you will make money from the investment.  Do you want income or appreciation, or both?  Rental homes provide both, land provides only appreciation.
  • May 07 2011
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Land can and does go down in value just as with home values.  If you are thinking of investing in land make your decision based on long term.  Work with an agent who can show you the different area's in which growth is a factor.  You can buy land today that will not be worth one penny more many years from now or perhaps less.  If I were going to invest in 'land' (not a lot) I would (and do) look in area's where I see there to be potential 'growth'.  That is when your land will appreciate in value.

Do a lot of homework and always work with a professional even if you want to buy land that is located out of state.  Good luck! 

  • May 07 2011
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