- jayhinrichs wrote:by land on line
So there are business's that do nothing but scoure the country buying these properties and then remarketing them by selling them on contract and they a make a living collecting the monthly cash flow…. There is a good market for cheap property by and large that people will think hey for 5k 500 down and 50 a month I own a property.
Now not all properties like this are unbuildable but a very large % are that is why they are let go for tax's and thats why you can buy them for these prices. And in the old days when buildable lots where 100's of thousands buying these little cheapies was appealling.
I for one am a big proponant of buying land. However I only buy land that I know can be built on or is clearly in the path of progress like my Oregon land holdings.
But if someone wanted to stick their toe in the US water as it were you could search a few of the properteis out from a company like this gentlemens do some good research on if they are buildable under current zoning and health codes and it could be a good way to have yourself something that is no hassle.
Just always keep this in mind in the US you can definatly own a property but you definantly do not have the right to build on said property by the fact that you own it. It must meet city and state zoning and health codes. And these codes change over the years.
The biggest issue will be on site sewage systems. There are counties in CA like Sonoma county that its next to impossible to put septic systems on a smaller property. I know I own 2 ocean view lots at Jenner by the sea and if they were built on in the 50's there would be a house there today but today you cannot get a septic approved. CA is working on some new septic rules but who knows how long.The history lesson is valuable, I personally inherited a 5 acre parcel in Lucern Valley California, desert. It had been presented as a soon to be developed subdivision where you could live your wild west fantasy. This was in the 1950's and indeed the development was a fantasy – my father received it from his elderly friend for back taxes in the 80's then it became mine. It was unsellable, until Bally Fitness and a theater chain corner-stoned a strip mall at the intersection of Apple Valley Road and The Pearblossom Highway. When the power grid and other utilities reached out into the desert to that point, tens of thousands of acres suddenly went from zero value to +/- $5000/acre.
With Google Earth, the internet and my telephone I can determine which properties are solid choices when buying. Most vacant land is buildable, some may require engineering. Honestly it would take about 10 minutes of actual work to determine from a given county if there are building restrictions on a given parcel. Local real estate agents can also let you know if a given street or area are compromised by environmental issues, bad neighbors or blight. This is the 21st century, you can build almost anywhere if you are willing to pay to do so. Spending $40K to put in a well and pump may be daunting – but it does represent a potential money maker. Once you bring water to the surface, your property and your neighbor's land becomes more valuable. If your well is deep and expensive, then your water will be less expensive to buy than it would be for your neighbors to get their own.
In short it is true companies in the US buy properties for pennies on the dollar as described above, but with the recent readjustment in the US market, IE crash, there are a ton of properties available. These companies buy and sell many parcels, why would they, we, want to buy a stinker? Buyers are gold, we want testimonials, referrals and repeat business, all companies in competitive business in a tight market do. If a company finds out one of their properties is not worth the dirt it is, then they are better served to sit on it – put it on the back burner – sell it to a next door neighbor or wait until urban renewal or civilization corrects the issue.
Be wary of businesses that have no history or an obscure one, they may be a shell attempting to unload "swamp land". On the other hand, if a company has been in business and survived through the last 5 years, through recent events, then the company's owner is reputable and likely has a keen eye.Stu that is a great point about the last 5 years .If a company is still going it says a lot.
Good Point
Alex
Stu,
I grew up in the land business my dad was a an agent for Boise Cascade when they developed 27 subdivisions in CA in the 60’s.
Some of those subdivisions did well, ” Pine Mtn Lake, Lake Wildwood” and some like you say were and are stinkers. It was acceptable practice in the day to build out literally 5,000 lots and only put a water system in that would handle 500. And all on septic tanks as well.
The lots by and large are to small for onsite water and sewage.So all these lots got sold, many were let go for tax’s some of the better ones were able to form municipal districts and eventually put sewer and water to each lot….
There is no question that time creates value it just depends on how much time… I remember in the late 60’s looking at brochures of 10 acre lots on Maui which are all now covered by resorts and thinking who would pay 200k for that, That was like 20 million today.
And since I grew up in the land business and my Dad developed well over 4 thousand lots in CA I am fully aware of how excited folks get when they buy their little piece of heaven.
But as you state with the resetting of price’s one can buy shovel ready lots for the price of what folks are selling san bernadino, Riverside, Modoc, Lake, Lassen , California lots. As well as Klamath County, and other way out their Oregon counties.
I just bought 7 lots in a great subdivision of 300k homes in a suburb of Atlanta 1/2 acre each sewer and water for under 5k each for example, Of course these are cash deals, and most of the people that are attracted to your type of invesmtents are the 500 down 100 a month types, My dad Sold thousands of them like I said, I even saw on your web site one parcel in Lake Co CA. that my Dad no doubt owned 40 years ago.
The big land guys in CA then went into the R ranch concepts and started selling memberships in big properties those were successful for a time as well. R ranch at the Klamath River another one out of Red Bluff…
Oh and another property I saw on your site was in Stoneyford CA very few people would know where that is, that was a 50’s 60
s development that went bust. Neat area though.Like you said I could go on and on about the history of the land business and I might just write a book on it. Not that any one would buy it however I do have some pretty unique insight.
By and large I doubt from what I know of the Aussie buyers that they have any interest in these types of properties they want income producing, I am sure they can go to the out back and buy desert land for cheap all day long, Was it not Art Linkletter who bought millions of acres of the out back???
JLH
I do not claim to be an expert on land values in any area of USA.
I would make the observation, as an Aussie investor, that to buy land only, even at bargain rates, is pure speculation.
If you can afford to buy and hold land (and pay taxes on it ) for a very long time in the hope that one day you will make a capital gain, then by all means go ahead.If you are looking for cashflow and/or capital gains in the next 5-10 years, I would be very wary.
It is my observation that there are a lot of houses for sale, for less than you can build the same house.
ie If you got land for free, and built, you would have possibly few buyers, and for your break even price, you would be competing with much cheaper houses in more central locations.eg we saw some new display homes in Gilbert (Phoenix suburb) AZ for mid $200's.
Other newish homes in the area would sell for less than half of that.
Food for thought.I am sure there are areas where land may be a good investment, but unless you are an expert in that specific market, buyer beware!
this is whats fueling the USA market homes for exactly what you describe less than replacement cost and the land is free,
the difference here in the states and I have no idea about OZ is that there are always buyers willing to pay the price for NEW CONSTRUCTION. Buyers just do not want to live in someones flea trap, etc etc.
whats happening here is builders are snagging these cheap lots and building new construction then pricing it 100 to 150k lower than 5 years ago and people are buying them,
I know I am doing it in Oregon right now, Not in huge numbers but I will close 11 plus homes this year and make a nice profit on each more than if I was flipping foreclosures thats for sure without all the hassles and headaches of working on existing houses. Its what pays our bills, and allows us to build our rental portfolio with our investors. So at the end of the day we own everything we bring our investors into. Just a unique way of doing it. even by US standards.
YOur dead on with the land especially properties that are scattered in remote locations, The case Stu talks about in Lucerne valley is only relevant to something close to the LA basin, and there are 500k more lots sitting out there that will be another 50 years or more till they see there HBU (highest and best use) this is why the chinese buy a lot of these they thinking multi generational.
Your comments are exactly what I thought most Aussie investors would think of land plays.
Although Like Stu says some of the biggest returns are made on land plays in the path of progress you just need to be very diligent in finding that path. ONce you do it can be retirement on one deal.
Hi Jay,
I read your comments with interest. (Thanks.)Aussie new homes tend to be not much more than similar local properties – only 5-10% more, if that.
Locally to us (outer SW Sydney) there is a lot of development, generally single family homes on smaller blocks, which are selling for about the same price as other new-ish homes. There is not a lot of profit margin for the builders, and our state is suffering under-supply of new houses in comparison to a growing population because of this.I stand by my opinion that for overseas investors, buying (undeveloped) land is highly speculative.
Do not disagree with you on the speculation, thats the definition of land investing its called speculating.
I own one piece of property just north of San Francisco in a town called Rohnert Park, I bought it in 1989 for 35k. its 4 acres was unbuildable at the time and has been ever since, However I new town was coming my way, there is a shopping center anchored by HOme Depot just across the st. and the TExas Station gambling folks bought the property on the other side of me 160 acres for 240 million and are, once things recover yet again going to build the largest Indian Casino in the US and the closes gambling establishment to SF (60 minutes) our property got brought into the city, and is zoned High density residential 30 units per acres. so 120 units at 40k a door in the right market and we are sitting on a 4.8 million dollar property. Been OH 32 years but I bought it when I was 23 with 2 other buddies we paid 300 a year in property taxs this whole time, Hopefully I can sell it before I die otherwise my kids or grandkids will fore sure inherit a property that will be worth millions, And this is the way it goes with land.
I optioned 119 acres in Portland Or. 3 years ago for 5.5 mil, and Intel broke ground this year on a 3 billion dollar fab plant this one is going to pay off in 5 years we are hoping and will sell for 30 to 50 mil. based on todays values. But we risked 500k in cash to get the property before it was brought into the Urban metro boundary and Identified as property that can be developed if it was passed over we would have flushed our 500k down the drain, its those kind of risk rewards that are out there all around the world.
JLH
Portland metro is growing at 40,000 people per year, and this given that the Oregon economy never really recovers. Lumber and fishing are no longer the backbone of solid long term sustainability. Tourism remains solid especially with Tom McCall's legislation limiting development of the entire coast – yet the state does not have a sales tax.
Intel makes for an interesting neighbor. I've lived here for 25 years now and I promise , anyone that has lived here more than a few months knows someone that worked for Intel…but I digress.
The discussion to this point has been stimulating, however I would ask the community to think outside the box – so to speak. Just a few years ago Investors and the public were riding high, despite indications to the contrary, and bought SUV s , Hummers, muscle cars and burly trucks. Now that gasoline has doubled in price over the last 12 years, there are a lot more hybrids on the road. I maintain that the same thinking went into home building.
Here in Portland we have a project called Street of Dreams. Some chunk of farm land within 30 minutes of downtown Portland, and there are still quite a few chunks still around, gets developed with cooperation from the utility companies. Really large homes with three and four car garages, lots of brick and columns. Truly beautiful homes.
There are more truly beautiful homes in America than people that can afford to buy and maintain them. Isn't that what the mortgage crisis really means? These houses were built to last a lifetime, they aren't replaced as easily as a car.
My point, there are plenty of homes available in gated communities and on the upper end, that market is covered now and in the immediate future. What there is a market for is sensible housing. Renting is what it is and renters are vexing. Small ergonomically designed houses, built to suit , that apply 21st century technology will be more affordable. Energy costs .and availability are important concerns. Building in the community has many rewards, real stimulation of the economy.
Value.Stu agreed on your assessment of the New construction in the portland market and elsewhere.
The day of putting maximum sq ft of house on the lot has been replaced with much more modest homes. The main reason is builders want to be under the 425k FHA limits that are also going down.
There is a real sweet spot in Portland for 250 to 399k… My Hood River project is 260k and we pre sold 5 this summer have not done that in 5 or 6 years…
Street of Dreams are always a collasol loser for the builders, One of the ones you mentioned that was built about 5 years ago out in Redlands area south of Oregon City was a perfect example, Huge houses with 2 to 3 million price tags that ended up selling for 30 to 40 cents on that dollar value…
My 110 acres by Intel you can view at http://www.americanrealestateinvesting.com I believe this to be the finest path of progress residential property in the entire Metro area, for the following reasons.
1. As you have stated nothing happens with out utilities this property has all utilities at the site.
2. State just built an overpass at why 26 that services Jackson school Road which is where our property is located.
3. vicinity to 25,000 high paying jobs property is with in 10 miles of Nike world headquarters, 3 miles from multiple intel sites, Fujitsu, Gnentech.
4. Any new jobs growth will go on the adjacent 800 acres that has just been brought into metro…
5. This property will come in with a variety of master planned amenities. With single family, multi, some strata, and a neighborhood commercial component.
Not sure any Aussies are really interested in whats happening in Portland Or. as we do not have super cheap rentals here you still need to pay 150 or so for something decent that rents for 1000 to 1200.
JLH
I tend to disagree with many of the foreign investors here, and I see land as an EXCELLENT play right now.
While it is entirely true that buying land TODAY won't make you "instant" fortunes, as reselling the property immediately for a profit most likely won't work, new construction is difficult (even though as Jay said, it can be done), and there's no income.However, if you look at the "path of growth" as mentioned above, there are some fantastic opportunities to acquire part of- or entire subdivisions, with all utilities already in place. It's really important to look at what is already there – you might be able to buy a parcel for a knock-down price (I'm talking paying like 5K for a parcel that was 100K+) but if there's no services to the lot, you're talking maybe 30-35K before you have a usable lot.
Many areas have seen land values plummet so low, that in my opinion, they can't go much further. If you look at the GOOD PARTS of Cape Coral, FL, just as an example, you'll see how far values have fallen. True, many lots in CC, Lehigh Acres, Ocala and God-knows-where don't have much of a value (and probably never really did…) as they're miles away from anything, but there are also so many good buys.
You can also look at buying as previous poster said – find a subdivision that is 60-70% built out with new homes, then move in and try to buy the remaining lots in the community. This sets you up very nicely for the future, where you can either:
a) Sell to a builder when the market picks up, or
b) Build new homes youself -more work, but more $$$ tooAlso, land doesn't come with tenants, maintenance, high carrying costs etc…
HighIncomeProperty wrote:I tend to disagree with many of the foreign investors here, and I see land as an EXCELLENT play right now.
While it is entirely true that buying land TODAY won't make you "instant" fortunes, as reselling the property immediately for a profit most likely won't work, new construction is difficult (even though as Jay said, it can be done), and there's no income.However, if you look at the "path of growth" as mentioned above, there are some fantastic opportunities to acquire part of- or entire subdivisions, with all utilities already in place. It's really important to look at what is already there – you might be able to buy a parcel for a knock-down price (I'm talking paying like 5K for a parcel that was 100K+) but if there's no services to the lot, you're talking maybe 30-35K before you have a usable lot.
Many areas have seen land values plummet so low, that in my opinion, they can't go much further. If you look at the GOOD PARTS of Cape Coral, FL, just as an example, you'll see how far values have fallen. True, many lots in CC, Lehigh Acres, Ocala and God-knows-where don't have much of a value (and probably never really did…) as they're miles away from anything, but there are also so many good buys.
You can also look at buying as previous poster said – find a subdivision that is 60-70% built out with new homes, then move in and try to buy the remaining lots in the community. This sets you up very nicely for the future, where you can either:
a) Sell to a builder when the market picks up, or
b) Build new homes youself -more work, but more $$$ tooAlso, land doesn't come with tenants, maintenance, high carrying costs etc…
Highincome property sorry not sure of your name I am sure it is in one of your other post.
I tend to agree with some land purchases , maybe my company is a bit different . As we build real estate portfolio's for our clients. So doing that ,I think every one should diversify what they are holding in there real estate portfolio. We are now also looking at land as a future gold mine in some areas of the South , mainly Charlotte and surrounds areas.
I would always leave all options open when I am buying real estate as long as there is a future upside that wont cost me to much today..
Sincerely
Alex Franks
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