I live in South Carolina. I am new to REI - I have stayed in the educational phase for too long and really just want to start doing things and learning first hand.
I am 32, married, have small children, a job that barely pays the bills with no real savings or retirement. I am in motion to improve my career but that is neither here nor there - point being I have little/no personal money to work with and will be a few years before that changes.
So I have been racking my brain as to how to get my foot into REI with the resources I do have.
My mom was given almost 3 acres of land many, many years ago. It is 40 minutes from my current house. It is undeveloped or I think the term is “raw.”
My grandparents have land in front of my mothers land that is another 2.5 acres or so and runs along a well used road. The area is growing and developing. It is in a rural area but within 15 minutes of a large city. The land is in a good school district as well.
My grandfather passed years ago and my grandmother is in poor health. My Uncle has basically been given the land with my grandparents house (it would be his in the will anyway). My mom still owns the land behind it.
My uncle is looking to sell the land with the home, his land and home, and possibly get my mom to sell her land with it because he is getting up in age and is looking to basically liquidate and move to a smaller, easier to maintain home and area.
The home is nearly 100 years old (but not the cool 100 year old houses - this is a more humble one). I have done home remodeling and repair for a few years and I would say that “flipping” that house would not be economical or profitable. The house is in need of major repairs. The roof is in bad shape, wiring throughout the house would need upgrading, the floor plan is awful, the flooring is in bad shape, no HVAC, etc.
My Uncle contacted a real estate agent and was offered $25,000 just for the land because the house is worthless the real estate agent said. My uncle believes the land is worth more then that. Zillow for some reason has the address possibly worth $80,000 but I don’t know how they come up with that number because I know that is probably incorrect.
My mom wants to keep her land and would even love to buy my grandparents land and house but it is just sitting there and they don’t have the financial means to buy it from my Uncle. My Uncle wants to sell the land and house and be done with it and have the money to use on retirement. I see all of this as a possible way to step into REI!
My mom said in her will that her land is set to be divided 4 ways between me and my 3 siblings. I have been pondering on REI possibilities. Since my parents and my relationship is very good and if I approached them with a solid business proposal they will likely support it.
I currently live in a house with my family. I have been trying to think of scenarios and what path I am wanting to take.
Should I ask my mom for my 1/4th and come up with money to put a trailer on it and begin renting it out - but then again that could be a large financial strain until I have more working capital?
Do I put a trailer on the land, move my family out on it and rent out our current house that is new, in good shape, good location - and I could possible get 1.5 times the cost of my mortgage for rent? Then do I see if I have enough equity in my home to borrow more money to invest somewhere else?
Is beginning REI with rental properties especially when you are scratching by each paycheck a horrible mistake? I just want to get my hands dirty and I feel this land has a good opportunity for me somehow.
I know this is long winded. I wanted to give a lot of details to hopefully let you all give specific advice or recommendations given the situation - or maybe I have just confused everyone 🤔. Either way, thank you for your time and responses.
@William Prows II I have a few suggestions, though I don't know your particular market well enough to give you the optimum strategy.
1. If you presented it to a Realtor and got an offer for the property, that;s a positive sign. However, I would NEVER let the purchaser tall me what a property was worth.
Contact a licensed real estate appraiser to get a true value, then and ONLY then should you entertain an offer.
2. With all of the parties involved, some deceased, be sure that they have been probated. If not, you can have a title nightmare on your hands.
3. ZILLOW??? When it comes to valuations on a property, Zillow is awful. I sold my own home last year. The day before I listed it, Zillow and Trulia - both owned by Zillow Group - disagreed on the value of my home by $60,000.
Friends don't let friends rely on Zillow.
4. If I were buying land with a teardown on it, my offer would be for the value of the land MINUS the cost of demo and disposal.
5. Whether you can demo the old home and bring in a mobile home is going to depend on your towns zoning and building dept. Do your homework there before making any decisions.
Good luck with it!
What can use valuation your property
The best thing you can do is try to convince your mother to sell the land. As it is it is a liability and not worth investing in.
As for yourself I do not believe you are ready to invest. You have no savings and no retirement. Until you make a determined effort to start saving for both you are not in the right space to be a investor.
To be a investor starting out the first thing you must do is make investing a priority in your life, do without, change your life style, downsize, live more frugally and save every penny possible. Believe it or not someone in your position that has "a job that barley pays the bills" is probably spending or wasting a lot of money that could go toward savings.
Those that live pay check to pay check usually do so by choice.
If you want to start moving forward change your life style, everyone can save if they truly want to.
I appreciate everyone’s response, though I disagree with this statement:
“Believe it or not someone in your position that has "a job that barley pays the bills" is probably spending or wasting a lot of money that could go toward savings.”
I don’t need to believe it or not. With respect, I have met with financial counselors, discussed my circumstances with numerous people. Made every logical cut - I am hardly spending or wasting a lot of money. In fact, I imagine most people would say “how in the heck are you making it on that?” I have made poor decisions in the past and at 32, I do not have a high paying job - which I am in the process of changing. That is why I am seeking more methods of income. Living paycheck to paycheck is hardly by choice.
How is my mother’s land a liability?
Savings, retirement - from what I am aware of does not qualify someone to be an investor. Sure, it can help if deals do not go as well as expected to have that money to fall back on. However, I argue that I am ready to invest. The question was for ideas regarding raw land - not my qualifications to be an investor (or perceived lack thereof).
Join the Largest Real Estate Investing Community
Basic membership is free, forever.