dumb question

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I'm looking to do some real estate investments that do not involve tenants, and was wondering if it's worthwhile at all to look at buying and holding land? I've heard stories about people buying and holding for a year, and then selling as towns close in on it for a profit. Is this worth considering, or are the odds too slim or unpredictable to both with?

If you have the cash money to buy and hold and know of future city planning it can be a big winfall. But if things change or do not go as planned and could take a while to recoupe your investment. It is like buying houses you must get it at a bargin price so that you can bail out if needed.

What you are considering is land speculation.

There are many decisions to be made in regards to speculation, some of which include:

Is growth expected in this area?
Are there any projects slated in the area that would increase/decrease the value of the land in the future? Not all land appreciates.
What is the land currently zoned? Can it be re-zoned?
How has the land been used in the past? Un-improved, Agriculture, commercial, Industrial? Are there any toxic residues from past usage?

One thing to remember is land investment is a non-revenue (meaning long term or speculative) generating investment therefore the money invested is throw-away until you sell.

When investing in land, it is prudent to know what projects potentially affect the value of the land and the potential use of the land.

Hope this helps:)

Originally posted by "jessiesc":

Hope this helps:)

Very much, thank you. I'm looking at several things right now but being in Southern California, most everything dealt with property out of the area or guaranteed that someone, even if it would be indidrectly, would be dealing with tenants or "lessees". One person on another page suggested I look at the stock market! But I feel like I know more about real estate than many people, and I'd rather take things in that direction. Land sounded interesting because being in Riverside County, I'm still relatively close to opportunities where I can use my knowledge of the area I live in or have lived in to help me evaluate. When the city of Corona moved in around my house, the value shot up immensely. Of course, I know a lot of people out there are thinking the same thing.. But thank you!

You're very welcome JennH.

I'm from california originally, in fact I worked in Corona and llived in Rancho Cucamonga where we also experienced incredible appreciation rates.

I know zero about the stock market except that anything I ever invested in I lost money on :( However, many of my friends have made money there.

Fortunately, my RE investments recouped my stock losses :)

If you do decide to follow through with land speculation, make sure you examine the land and have it surveyed before closing.

If it's a land locked lot, meaning there is no access to it except through someone elses land, it could be quite a gamble and may pay off big time. Then again you could possibly not be able to unload it either :( All depends on what's going on around it.

Good luck :)

And I noticed that online listings frequently say anything about access or even if the land is on a hillside! I checked out some things in Lake Elsinore just out of curiosity, and I learned after inputting tax numbers in another program why the cheapest things out there, were, well, the cheapest! At this point I think I'm leaning more towards other types of investments, and I'm learning a lot specifically about preconstruction investing. I've been saying I wanted to avoid being a landlord or paying a property management company, but I may have to take the slide afterall.

Originally posted by "JennH":
I'm looking to do some real estate investments that do not involve tenants, and was wondering if it's worthwhile at all to look at buying and holding land? I've heard stories about people buying and holding for a year, and then selling as towns close in on it for a profit. Is this worth considering, or are the odds too slim or unpredictable to both with?

Land is a great investment but you really should be thinking of it as a long term investment at this point in the current housing cycle. Like you said, there are very little headaches associated with investing in land but it can also be very speculative. Make sure you do your homework first before buying anything and always take what a realtor says to you with a grain of salt.

You can make alot of money with land if its bought for the right price in an area that will grow in the future. Go to the courthouse in the county where the property is and ask them everything you can think to ask. These people are usually very happy to answer all your questions.
rochelle

I too am from your are and have moved to Utah where buying and selling land is the best money maker, my husband and father in law are developers and investors. This state is booming and a great place to buy land if you are willing to sit on it also depending on how much you are willing to spend. Another option is, if you have cash some developers need it to back their developments, and contract you a return based on what you put in. If you have any questions let me know.

cdtcgordon,

You sound like a new investor.

I am not sure that you can prove that land is the best money maker. Hence I suggest you do not make such a claim. Avoid best, never and other words that are absolutes.

There are many ways to make money with RE. Development is one. Holding land that is in the direction of growth can be another. One is more active while the other causes you to wait for the world to come to you. Leverage and other creative financing is easier when dealing with improvements and not land as lenders do not like lending on land. There is a reason for this. They are pricing in the extra risk.

John Corey

let me correct myself. I am not a new investor, we have been developing property for plenty of years. For myself and my husband here in Utah land is the best money maker. The development is so rapid and new construction is booming and is supposed to for the next while. My kids bought their firs lot 4 years ago for 30k it was 1/4 acre and now 1/4 acres are going for no less than 150k. a big price just. So I do correct myself in say that for where I live Buying land is the best money maker

Originally posted by "cdtcgordon":
let me correct myself. I am not a new investor, we have been developing property for plenty of years. For myself and my husband here in Utah land is the best money maker. The development is so rapid and new construction is booming and is supposed to for the next while. My kids bought their firs lot 4 years ago for 30k it was 1/4 acre and now 1/4 acres are going for no less than 150k. a big price just. So I do correct myself in say that for where I live Buying land is the best money maker

Thanks for the clarification.

So that things are really clear it sounds like you are talking about paying all cash and holding lots or larger parcels of land. Is that correct?

As a developer do you improve the land so that you have buildable lots when done (you put in the roads and infrastructure)? Or are you just buying the lots from another developer who handles the improvements?

John Corey

We do all of it buy raw land and do all of the improvements till they can be sold as "lots" for homebuilders(larger builders who buy in bulk), or individual who want to have a custom home built. We do the improvements utilities sewer and curb and gutter (concrete)

We do also sell land at discounted prices. For example we bought some property some years ago 15 acres bordering Gladstan golf course all of the zoning is in place it is annexed into the city and is ready to be developed, however some of the utilities are about 2 miles away, a large amount of money to take this to the property, however if we sold now we would be able to make some money as well as helping and investor who can sit on the property, as we speak the utilities are being put in by another developer so the will be only about 1/4 mile maybe closer but it will be about a year or so. For us selling this at 180k per acre, and once the property is developed lot start at 480k per 3/4 acre in this area. so someone willing to sit on it is making about 2.5-3 million once all improvements are done. But as you stated before most people don't have the money to pay cash and sit on the property so we have had it on the market for about 2 months