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No brainer?
Old 08-06-2005, 03:29 PM   #1
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No brainer?

You all know about my temptations to resume active RE investing.
Probably a dozen or so near misses since I retired. If I wait 24 hours
the urge passes. But, it's in the genes and I am ALWAYS looking. Now I am going to take the plunge. I am bidding in a sealed
bid auction for some raw land near our home. I know the property
and I know the area. I already have a solid plan on how to remarket
it if I win the bidding. I told DW the key is to bid to give yourself a decent shot, but stay low enough so you won't get hurt no matter
what happens. IOW, even if I can't resell (a very doubtful outcome
IMHO) I would still be happy just holding the property. No
maintenance required and no insurance (just taxes). If I can't sell,
the kids will get it some day. Anyway, I am having fun with it and
not "betting the farm" on the deal. BTW, I have bought RE at auction
before and always made out.

JG
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Re: No brainer?
Old 08-06-2005, 03:40 PM   #2
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Re: No brainer?

Quote:
Originally Posted by MRGALT2U
I am having fun with it and
not "betting the farm" on the deal.
JG, best of luck in your bid to buy the farm...

REW
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Re: No brainer?
Old 08-06-2005, 03:49 PM   #3
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Re: No brainer?

Quote:
Originally Posted by MRGALT2U
IOW, even if I can't resell (a very doubtful outcome
IMHO) I would still be happy just holding the property. No
maintenance required and no insurance (just taxes).
JG, know you have probably considered it, but how siginificant would the annual property tax hit be if you can't resell it? This is Texas, and taxes aren't cheap, even on undeveloped land unless you have an ag exemption like Ol_Rancher.

[EDIT: Realized you are bidding on property in IL, not TX. Hard for us fixed base operators to keep up with you snowbirds.]

REW
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Re: No brainer?
Old 08-06-2005, 05:23 PM   #4
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Re: No brainer?

Seems like you just have to be lucky enough to be the highest bidder for your zone price. Best of luck. I enjoy your posts but wish you would noodge yourself to a more accomodating postion re progressive politics. I sure don't think progressives are looking to loot your nest egg. On the other hand, I think the likes of Rove and Delay don't mind their cut of your mojo. Just as the dems wouldn't either.
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Re: No brainer?
Old 08-06-2005, 05:28 PM   #5
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Re: No brainer?

Good luck JG. You do realize that if everything goes as you hope, then you will probably get more and more of this temptations!

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Re: No brainer?
Old 08-06-2005, 05:43 PM   #6
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Re: No brainer?

Quote:
Originally Posted by REWahoo!
JG, know you have probably considered it, but how siginificant would the annual property tax hit be if you can't resell it?* This is Texas, and taxes aren't cheap, even on undeveloped land unless you have an ag exemption like Ol_Rancher.

[EDIT:* Realized you are bidding on property in IL, not TX.* Hard for us fixed base operators to keep up with you snowbirds.]

REW
Insignificant.

JG
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Re: No brainer?
Old 08-06-2005, 05:51 PM   #7
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Re: No brainer?



Good luck buddy. How big is the parcel?



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Re: No brainer?
Old 08-06-2005, 05:54 PM   #8
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Re: No brainer?

Quote:
Originally Posted by windsurf
Seems like you just have to be lucky enough to be the highest bidder for your zone price.* Best of luck.* I enjoy your posts but wish you would noodge yourself to a more accomodating postion re progressive politics.* I sure don't think progressives are looking to loot your nest egg.* On the other hand, I think the likes of Rove and Delay don't mind their cut of your mojo. Just as the dems wouldn't either.*
Thanks a lot. *I don't worry about what others may do. *Figure I can deal
with whatever comes up. *Just one of the many perks which come with
galloping egomania * * BTW..............if I had the resources, I would
gladly share with "Rove and DeLay". *I don't always agree with their
positions, but I like their in-your-face approach. *I can tolerate people
who disagree with me far more easily than wimpiness and waffling.

JG

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Re: No brainer?
Old 08-06-2005, 06:00 PM   #9
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Re: No brainer?

Quote:
Originally Posted by Dreamer
Good luck JG.* You do realize that if everything goes as you hope, then you will probably get more and more of this temptations!

Dreamer
Yep! It's a conundrum.

JG
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Re: No brainer?
Old 08-06-2005, 08:54 PM   #10
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Re: No brainer?

JG,
You haven't un-retired, have you? Just checking. Anyway, good luck, and if you're as resourceful now as in the past, this will be a winner. Anyway, hope so, and keep us posted (win or lose).
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Re: No brainer?
Old 08-07-2005, 06:35 AM   #11
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Re: No brainer?

Quote:
Originally Posted by Eagle43
JG,
You haven't un-retired, have you?* Just checking.* Anyway, good luck, and if you're as resourceful now as in the past, this will be a winner. Anyway, hope so, and keep us posted (win or lose).
"Unretired"? Perish the thought...............or, as Mr.T would say..............
"I pity the fool!". Anyway, I will report the results when I have them.

JG
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Re: No brainer?
Old 08-07-2005, 07:03 AM   #12
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Re: No brainer?

Heh, heh, heh, heh.

Is this the RE version of asset class(raw vs rental vs) investing and portfolio rebalancing?

What does Modern Portfolio Theory say about correlation of raw land to housing and expected growth of the asset class.

Have you run your decision through an MVO calculation.

Don't tell me it you just used experience and a number 2 pencil.

Heh, heh, heh.
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Re: No brainer?
Old 08-07-2005, 02:24 PM   #13
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Re: No brainer?

Our family experience with raw land is uniformly negative.

Whatever we buy as an investment now, it has to have a positive cash flow or we don't touch it.

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Re: No brainer?
Old 08-07-2005, 02:28 PM   #14
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Re: No brainer?

Quote:
Originally Posted by Ed_The_Gypsy
Our family experience with raw land is uniformly negative.

Whatever we buy as an investment now, it has to have a positive cash flow or we don't touch it.*

Gypsy
And mine is uniformly positive. Never lost a dime and made out big
a couple of times. I've said it before. You have to make your money when you buy.

JG
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Re: No brainer?
Old 08-07-2005, 02:57 PM   #15
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Re: No brainer?

JG,

Real estate of any kind is a specialty and requires expertise that we don't have. I leave it to the pros now.

I am afraid that there are a lot of folks getting talked ito real estate investment that do not appreciate the difficulties (see late night TV ads).

I like your point, "You have to make your money when you buy."

Ed
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Re: No brainer?
Old 08-07-2005, 03:38 PM   #16
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Re: No brainer?

JG,
Sounds good to me. I believe in investing in your circle of competence (stolen from WB). We strickly buy rentals and rehabs. Like you said "you make money when you buy." That being said I still have not cracked the code on commercial real estate yet. But, I'm 32 and have a few years to figure that angle out. Never considered raw land as my requirement has always been to cashflow the day I close. I would love to hear your thoughts on commercial real estate though 8)
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Re: No brainer?
Old 08-07-2005, 03:57 PM   #17
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Re: No brainer?

Quote:
Originally Posted by Arif
JG,
Sounds good to me. I believe in investing in your circle of competence (stolen from WB). We strickly buy rentals and rehabs. Like you said "you make money when you buy." That being said I still have not cracked the code on commercial real estate yet. But, I'm 32 and have a few years to figure that angle out. Never considered raw land as my requirement has always been to cashflow the day I close. I would love to hear your thoughts on commercial real estate though 8)
I think you are doing fine for 32. I started out with apartments and SFHs.
This was successful but I moved around so much in my primary job
that I never made a lot of money. Raw land was frequently bought
for personal use (I used to be an avid hunter) and then gradually
morphed into an investment. Otherwise, I was like you in that I wanted
positive cash flow right from the closing. The commercial I got into by
accident. In 1990 I bought a small manufacturing company which owned
a bunch of commercial real estate (as well as an apartment and three (3)
parcels of raw land. With hindsight, I could have done much better
but still made out fine overall. Remember though, everyone needs a
place to live, but book stores and travel agencies (2 of my tenants) are not necessities of life.

An aside. All commercial properties were leased and eventually sold.
In all cases the tenants made major improvements to the properties
while they occupied them. In one case I had it in the lease that the
tenant would reroof the building (roof was shot). This was a major help
when the properties were finally disposed of.

Good luck.

JG
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Re: No brainer?
Old 08-07-2005, 08:43 PM   #18
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Re: No brainer?

Good luck on your deal.

We're thinking of commercial real estate right now as well ... considering either a small strip mall, or small professional office building. Want multi-tenant, general use building to reduce the risk. Familiar with SFH and condo's ... just getting into this potential. Definitely interested in your experiences, JG.
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Re: No brainer?
Old 08-08-2005, 09:01 AM   #19
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Re: No brainer?

JG,

Welcome back! Harder to be on the sidelines than to be in the game.

Taxes on the waterfront piece I have are a killer ($200/mo !). Bet the land didn't appreciate at that rate for years. Today's market is DIFFERENT ... but for how long? That's the question ...

Good luck!
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Re: No brainer?
Old 08-10-2005, 03:34 PM   #20
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Re: No brainer?

Well, I promised to report back and here it is.

I had the bidding forms filled out, had visited the property,
had maps, aerial photos, the required check etc and was on
my way to drop everything off when I had an epiphany.

Now, at my bid price level, this was a can't miss deal, i.e.
I knew I could make a profit. Hence the "no-brainer'
description. However, I began thinking about how I would
need to get and pay for title work (yes, the buyer was required to do this), pay the property taxes until it sold, place and pay for ads,
show the property to prospects, etc. Decided this was too much bother
and intrusion on my time and trashed the whole idea. This story
is just for your amusement. It probably won't help anyone
except for those who might be a little guilty about being lazy.
Don't worry folks. You can't get any lazier than that.

JG
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