Investing in .. land?

[al77]

Originally posted by STR8UP
Don't assume you can't do something just because most people tell you that. Read the books that I suggested in my financial books thread.

ANd if you don't pay cash for the land you will still have a monthly payment. Your equation just doesn't add up. I don't see how you expect to make any money on 6% appreciation. Put your money on a mutual fund until you have some more credit and knowledge to start buying RE.

I don't know if I'll be able to make money on the land. Maybe not at all. But it is something in what I can invest and at least take part in the process by selection a lot myself.
With RE - I don't think I can find renters _fast_, so I'll need tons of cash to pay the mortgage and this is one ofthe biggest obstacles. How would you find renters and find them fast?

You are right now stocks is what I am trying to learn.

 

[al77]

Originally posted by American_Psycho
You could invest in mutual funds with expected returns of well above 5-6%

I don't think it can happen:
I dig a little bit deeper on mutual funds. On average they might give like 5% return. One year they have 20%, next 10% then
-15%..if you average it you will get about 5%.

 

[diplomatic_lies]

I could get 5% interest by leaving my money in an ING account.

 

[al77]

Originally posted by diplomatic_lies
I could get 5% interest by leaving my money in an ING account.

I am not very familiar with ING.
But here is what they say:
"High interest, no fees, no service charges, no kidding.
With an Orange Savings Account, you earn a variable 3.80% Annual Percentage Yield (effective 12/31/05 ) on savings every day, with a level of flexibility, freedom, and security you simply won't find at other banks. And because your account is FDIC insured, your account is always secure. "
http://home.ingdirect.com/products/products.asp?s=OrangeSavingsAccount

3.8% is not something even close to 5%. Moreover while land is only going up, this 3.8% will not do so.

If you are talkign about UK ING then:
http://www.ingdirect.co.uk/html/aboutsavings/interestrates.html

It is essentially 3.53% and you gotta be UK resident.

I faild to see where you can actually get 5% interest at ING.

 

[diplomatic_lies]

I'm not in the UK or the US.

However, my point is that 5-6% isn't much of a return. You could get the same return by a long-term deposit at the bank (ANZ currently offers 5.2%).

 

[al77]

Originally posted by diplomatic_lies
I'm not in the UK or the US.

However, my point is that 5-6% isn't much of a return. You could get the same return by a long-term deposit at the bank (ANZ currently offers 5.2%).

In my bank it is about 4% for a 2 year CD.

No one is saying 5-6% is a lot. I am saying it is consistent: a bank can simply change the rate, but land will not go down only up.
Moreover where would you get better than 5-6% _consistently_ year to year?

Although I have to admit 5.25% for 4 months or 5.6 for 12 is a really good deal.
But it is in Australia, so teh currency is different, prolly you have higher inflation than US does.

 

[Bonhomme]

In most cases, land is an inferior investment to improved property, athough it sometimes can work. A few good aproaches for buying land are:

1) If you can get it below market and flip it quickly. Residential land is great for tax sales. For commercial land, you have to be more careful, on account of environmental considerations, which leads to...

2) "Brownfield remediation" can be pretty lucrative if youy know what you're doing. A "brownfield" in an area of high property values could be a gold mine. But you really, really, need to know what you're doing and how much it will cost, including "red tape" costs. Not for beginners.

3) If you're a builder, to build on.

4) Situational. Say you know of lakefront property that fails a perk test, but you also know city water and sewer services will be available soon. Then you can make a killing when the "unbuildable" land becomes "buildable." In such a case, you also may be able to rent lake access or camping rights if the lake has no public acccess.

 

[GirlCrazy]

A good way to learn about real estate is to take the college classes you need to get an agent's license. That's what I did, and took the appraisal and broker classes as well.

It's actually better to buy RE without the license (you're not bound by a professional code of ethics), but it's still good to have the knowledge of what agents do, how RE transactions work, who the players are, and what you can and can't do.

Also knowledge from the classes got my mom out of losing her house to a shady agent. He offered to buy the house himself, dumped a sh!tload of money into it, then backed out of the deal and started procedings to put a lien on it. I pointed out that maybe he'd get away with it, but he'd made enough ethics code violations to lose his license for good, and in the end he walked away clean and lost the $10k he put into it.

I highly recommend the semester (or two) of a few nights a week at a community college as a starting point.

Oh, and I found out a couple days ago that my sister wants to go in halves on an apartment complex in Spokane. $15k down a piece should get us 4 units or so, depending on how creative we get.

STR8UP, what do you think about taking some of my equity stash (about $100k give or take) out of the house I live in to maybe buy several complexes instead of just one? Will I get the loan with that money down? I can't flip this house, and I can't owner occupy (like my sister does) the new property, so I'm at a disadvantage for getting those fancy loans she gets.

 

[al77]

Originally posted by GirlCrazy
A good way to learn about real estate is to take the college classes you need to get an agent's license. That's what I did, and took the appraisal and broker classes as well.

The idea is good, but very expensive. I'd rather read a book with excatly same material. A course can costs 300-500 and a book is 100 times less than that.

Anyone can recommned something comprehensive?
I guess some time ago somebody posted a list of RE books...can't find it yet. Anyone knows where to find it?

 

[STR8UP]

Originally posted by GirlCrazy
STR8UP, what do you think about taking some of my equity stash (about $100k give or take) out of the house I live in to maybe buy several complexes instead of just one? Will I get the loan with that money down? I can't flip this house, and I can't owner occupy (like my sister does) the new property, so I'm at a disadvantage for getting those fancy loans she gets.

Would I do it? That's exactly what I do. I buy property then extract the equity later on and spread it out to multiple properties.

Should you do it? That depends. I have quite a few places to pull resources from which gives me staying power if I get in a pinch. Only YOU know whether or not you are in the right position to take on certain risks.

I will say this though.....

I see lots of my friends sitting on equity in a few pieces of property they own that they just let sit there and do nothing. They are always curious about what I do but are so afraid to risk what they have it never does anything for them. A good friend of mine bought a house for about $500k a little over a year ago. His neighbor's house (although slightly larger than his) just sold for $1.3mil. He is sitting on over a half million dollars in equity, in addition to having another half mil in inheritance money, and the guy is scared to death to buy a couple of $130,000 investment condos. His fear is completely irrational, but real nonetheless. If I were to add his million dollars in cash and equity to MY resource pool I would double it within a year or two. He would rather play it safe. To each his own.....

 

[STR8UP]

And about those "fancy" loans....

Why can't you get them? Is your credit not up to par?

We get investor loans for as little as 5-10% down with credit scores in the 700's. You can sometimes even roll the closing costs into the loan further reducing your cash outlay Keep in mind this won't work for bigger apt. complexes, only 1-4 unit bldgs. I believe.

Learn to get CREATIVE! I am officially closing on my townhouse (I rent while the contract is pending) on Friday. I initially had to put 30k down. When all is said and done I will receive $35k BACK TO ME, and the title to the property. That's an extra $5,000 in my pocket on top of now owning the property. How's that for the icing on the cake?

The first question you might ask when you hear I am doing something like this is, "Why would you borrow MORE money than you bought the property for?" Well, it just so happens that I have first crack at a condo conversion that looks really good. Each unit only requires $2,500 down and some units won't even be ready till the end of the year. SO.....I take the $5,000 I get back from buying my personal residence and buy two of these condos. I choose units that won't be ready for a long time. By the time they are ready I sell them and turn that $5,000 into $20,000-$60,000 or possibly more.

Money is all on paper. Once you get used to shuffling it around you will find that you can make a living and get rich by simply moving it from one place to the other. Keep in mind this holds true for borrowed funds (as illustrated in the above example) as well as cash on hand. Start with one and keep multiplying it and eventually you will own half of your city. It's not rocket science, you just have to get out of that traditional mode of thinking and learn to think like the wealthy.

 

[GirlCrazy]

Why can't you get them? Is your credit not up to par?

My FICO sits at about 690, but it's got some incorrect info on it (related to my BK 5 years ago) that would boost it up well past 700 once I get it corrected.

Luckily my sister does data modeling for Fair Issac (the FI in FICO), the company that decides what your credit score is, so she's helping me fine tune my FICO. She knows exactly how the scores are calculated.

What should my FICO be in order to get the good loans? Can I get around the problem in the short term by having a partner with a better score?

Once my FICO is fixed, I'll probably take your advice and put that equity to work. The risk is no problem - that's what separates the men from the boys