Property with acreage - good or bad investment?

Question

Thomas S. · Answer

Rental property is a asset, land is a liability since it produces zero income. Tying the two together simply reduces the value of your asset since taxes etc. on the land will draw away from the asset.

Rural rental properties in general make for poor investments and much greater tenant management issues.

JD Martin · Answer

My personal experience is that tenants want yards, but they want small yards that take 10 minutes to mow and look after. The homes we have that have larger yards tend to have more people mention it as a negative when the house turns over. I would not have a rental property in a rural area unless it was a destination vacation area, and even then I'd have to think it through. I like having public water, public sewer, and city police/fire/trash/brush services for the rental properties.

Robert Ellis · Answer

Hi Elizabeth, i don't think it would be the worst strategy. You should look at multifamily properties with acreage as well. You could also build your own as well. How many acres do you need? Obviously a single family will have the most opportunities to purchase.

Andrew Johnson · Answer

@Elizabeth Thompson So you're basically operating at two extremes. Either a condo with zero land (but association fees) or a single family home on enough acreage to allow finishing, family camping, etc. without bothering the tenant that's living there. I'm going to be overly general and say that neither of these ideas are the best for your stated goal of "pay for my kids to go off to college". I don't know a thing about Westerville, OH but where I invest I'm not too far from areas with land/acreage. The reality is that it's farther from town, a long drive for a commute, and it's going to be more expensive than something you buy on a 1/4 acre lot. So the standard question is: Who is your target renter? What was told me to (again, where I invest) is that you can find people that value the extra land, maybe there's an outbuilding for boat storage, etc. but those people are few and far between. You might have 30 days in-town of vacancy but it could be 3-6 months to find a suitable tenant out-of-town that values the acreage. Dropping the rent doesn't really help because it's not a matter of money as much as it is finding someone who wants to be on that much land but doesn't have the means to buy. It's just a much narrower group of prospective tenants. Mileage in your market may vary :-)

Matt Vezina · Answer

If you're looking at wooded acreage there may be value in the standing timber. You could offset some of the purchase price through a selective harvest that won't destroy the recreational value you seek from the property. Many states also provide generous property tax incentives for actively managing a woodlot though I don't know if Ohio is one of them. If you pursue this option you should have a forester do a timber cruise to assess the total value of the standing timber and how much you could reasonably expect out of a harvest.

Denis F. · Answer

Hi, I would separate the 2:

1. Find a good rental for the purpose of renting, getting cash flow/appreciation, close enough to home if you are going to manage yourself.

2. Find a land for the purpose of the outdoor activities. Criteria are very different (creek, lake, mountain...)

If you try to buy something with all criteria, you'll most likely have to compromise quite a bit and may end up with high vacancies or a tenant who doesn't like to see you every weekend in "their" backyard.

Property with acreage - good or bad investment?

Property with acreage - good or bad investment?

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