My name is Tim and I am just starting out on my real estate journey. I found a piece of land in Desert Hot Springs, CA that I am thinking about purchasing. It is near palm springs and I was thinking in the future to place a modular container home. It's a residential plot of land. I figured that worst case would be that I have land that I am paying for a few hundred per month. My question is, is buying land a good investment?
Any comments or advise would be greatly appreciated.
Land can be a great investment however it can be more challenging with the lending depending on how you intend to finance it without having a structure as a assest. And be sure to check with the local building department and get a written copy of the zoing use of the land so you are 100% sure of what it can be used for, modular container homes are not always allowed etc. Good luck!
@Timothy Medina as long as its usable, do your dudeliagence, speak with building dept, zoning dept and board of health if required. By me boh approval has the final say if the structure will require a septic system.
Thank you both for the inputs. I have been doing some more research and have formulated a task list and questions to ask the realtor, zoning, board of health as well as sewage/electricity.
For financing, I will use cash for at least 20% of the loan and find out more on how to finance land without having a structured building.
I just bought two lots here in Alabama to build spec houses on. As a builder I can keep costs down a bit as material prices are sky high, but you said you were going to place a modular container home on it.
Property is like any other investment, buy low and sell high! Or build on it and sell even higher!!!
I'm familiar with that area in relation to the pot industry. The way to look at a buy and hold on land is to compare your return to what you could do if you bought stocks or another asset class.
Go on Zillow and look at the appreciation of similar lots over time.
Are there better areas that will appreciate faster or have more liquidity in case you have a financial reversal and need to sell fast?
Look at the community and location in terms of growth and supply.
Are major employers locating in the area? Is the community growing based on census data?
I suggest you verify major deal points from at least two sources. For example, if you find out you are allowed to put a manufactured home on the site call a local contractor with experience building out manufactured homes and the municipal zoning office. Make sure you at least speak by phone to the planner in the local zoning dept.
Do not rely on disclosures or analysis from your real estate broker. Do not rely on what you read about the zoning online even at the municipal website.
A good question to ask the planner is how long it takes to get permitted? Other major issues will be how the municipality handles sewer and utility hookup etc
Do a quick analysis of all your major costs to improve the property and see if it makes sense, now in the present time to purchase the land. If you can not clear at least a 20 percent profit on an improvement the land is overpriced even if you can afford the payments. Buying land to live on it is not the same as buying investment real estate.