land question - how to get best deal

General Real Estate Investing
1

Hi there -
I posted a little while ago about where would be the best forum for this question and got no bites so I’m just going to put it here - if anyone can help out with advice I would most appreciate it.

There is a lot on the MLS for sale in a neighboring county that my husband and I want to move to (he works in this county). Very high property values. Lot is about 1 1/3 acre and listed for 350K. It is raw land, no permits yet, does have public utilities available for heating/cooling, water, and electricity. It is a nice treed lot in an established neighborhood.

My husband and I were thinking of trying to buy it and then in a year or two, sell our current TH and build on it. I say a year or two because we might do a stick build or maybe a modular and it will take time to decide plus get the permits, etc…

My question is this. It’s been on the market for almost 50 days. I don’t know if there have been offers. I have a real estate agent that I would use as a buyers agent on our behalf but before approaching him, I wanted to get advice from you experts here. I checked the tax records and unless it has been refied in the past 5 years (which may have happened, I’m not sure), then the owners should own it outright as it was purchased in the 70s for a fraction of the listing price (I don’t know if they did a refi or titled it to their daughter - would the real estate agent be able to find this out).

Ideally I’d like to get at a minimum a 20% equity position and present the idea of owner financing - as I"m seeing that more and more in my area to get props to move in this cooling east coast market. However, I’m very new to creative propositions and don’t know how to approach this.

I also have no idea how traditional bank lenders look at land (higher % rate?) so any advice there would help. We have excellent credit with FICO scores in the 700s and 800s but we are a one-salary family. We would sell some of our Merrill Lynch account to pay the mortgage until we sell our TH and move to the new one.

I’d love to get the total PITI under $1K a month, no PMI, and the taxes here on the unimproved land were about $2100 for last year; I’m thinking owner financing will be the only way to accomplish this, especially since I want to put as little cash down as humanly possible.

Again, any advice would be greatly appreciated.

Happy Memorial Day! :slight_smile:

2

I posted here because I consider you all to be a wealth of good information.
No one has any tidbits to share with me on this post???
I was so looking forward to getting some quality advice instead of b/s nonsense.
Please help!

3

Well, first, there is no question in the entire post…this may be a big part of the problem.

Second, I don’t/won’t buy vacant land…

My two cents…

Keith

4

You’re right - it wasn’t a question. More like a statement, with the closing line asking for advice.

I didn’t know that technicalities would trump me up. You said you don’t buy vacant land but gave no explanation why. I’d certainly like to know your reasoning if you are inclined to share it.

5

There were several statements that could have been the core question that was never asked…I’m not trying to “trump you up”, just trying to point out that you will gewt better answers if you can make your question as specific as possible…general questions get general answers, non-questions get non-answers.

I am a RE investor, not a RE speculator. Vacant land rarely produces an income (the exceptions being agricultural land and land with hunting lease possibilities)…to buy land to hold is speculative.

In my opinion, your parameters are a huge pipe-dream. A $350K property with $2100 a year in taxes with a 0% 30-year mortgage will run you about $1147.22 a month. A seller would need to be desperate to make a deal like that…! There might be some creative financing options (interest only with a balloon payment, etc.) that could work but you need to be working with a motivated seller. Personally, I think $262.5K an acre is outta control but to each his/her own.

Keith

6

a bank is not going to finance this unless you are concurrently building a home.

yes, some times owners of raw land will finance, but as Keith mentioned for this size property you are going to have a healthy mortgage payment.

I would throw out my two cents worth that perhaps you need to rethink this plan. First off, 50 days on the market for land is nothing; land can be listed for years. It is a very illiquid asset and hard to value in many cases. Therefore, you will be making payments into a very illiquid investment that you MAY one day use as your primary residence. I know you said 1-2 years, but lives changes, jobs change, family members are added, people become sick, etc, etc. Given you have only one income and it sounds like this deal would stretch you really thin; not a good thing. The best path would be to wait until you are ready to move and then a concstruction loan to buy the land and build together. If the lot is still there, then great (there is a decent chance it will be) and if not there wait until you find something else.

My two cents.

PS. I just bought a building lot in a place I would like to move some day, but I paid cash and its value represents a very small fraction of my total investment portfolio. Even if it sits for 20 years, it will not impact me financially.