Is Buying and Holding Land a Good Idea?

Question

Hi everybody. I'm totally new to all of this, but I've been a fan of the BiggerPockets podcast for a few years now. I'm wondering if I can get some advice. I am a school teacher who is looking for a way to afford a 2+ acre lot for my family to live on some day (hopefully soon). We only have about $5,000 to invest right now, but I'm wondering if that's enough to get started. One idea I have is to start buying and re-selling smaller lots of land in super rural areas of Utah, and using those smaller properties to build up enough money to afford 2+ acres in a more expensive area like Utah County. Is that a reasonable idea? Is there a better way to use $5,000 and turn slowly build up to, say, $100,000 through buying and selling land?

In the future, I would like to do more with real estate, but for now, my first goal is to own my own chunk of land in the next few years or so. My wife has MS and she's dying to get enough land for a horse someday soon, but I decided to be a teacher ... so that may be a ways off if I don't get my foot in the door with real estate soon. Ha ha.

Teri Feeney Styers · Answer

@Michael Richardson can you afford payments on land? $5000 could be a 20% down payment on a $25,000 parcel - then you'd have payments of under $100 per month. Or maybe find owner carry terms for 10% down. Can you bootstrap your dream a little? Save up to add a well or utility hook-ups? I think @Jon Reed is correct. Appreciation without some sort of "value add" is going to be slow.

Jon Reed · Answer

I am sure there are people out there who can buy and sell small parcels of land quickly enough and with enough margin to grow wealth. However, the land game is a low margin and slow game (for most people). People who invest in land usually buy a large chunk and sub-divide it out or they buy land in expanding residential or commercial areas and sit on it for years until the right company/builder comes around and offers them a big chunk of money for it.

If I only had $5,000 right now to grow into $100,000 within a few years I would start buy and flipping utility trailers. Right now construction is booming and all of these subcontractors are buying up trailers super fast to help them keep up with the work load. Then, once I get that to around $20-30K I would go into flipping houses. Moral is, $5,000 is not enough money to go into real estate without a partner because every deal needs a cash buffer on hand to take care of those things that we do not expect like a new HVAC, roof, or termite repair.