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Raw land returns?
Old 10-25-2004, 07:16 AM   #1
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Raw land returns?

Anyone have experience investing in/owning raw land? I would have to guess that land would probably return something like inflation, with maybe a point or two better to account for decreasing availability in some areas. John Galt? Anyone else? I'm interested in DD, gotchas, carry costs, etc.
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Re: Raw land returns?
Old 10-25-2004, 07:51 AM   #2
 
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Re: Raw land returns?

Okay, as best I can recall I have owned:

An off lake lot in central Wisconsin
60 acres of woods in Upper Michigan with a small lake
Three (3) 40s of hunting land in Michigan
68 acres in Illinois used for hunting
A seven (7) acre ranchette in Texas

Results:

Except for the 60 acres and the 68 acres I pretty much broke even on everything else, but may have lost a little money when you factor in carrying costs and inflation. The 60 acres was
exchanged for another piece of property which I eventually sold. I made money overall, but not a lot.
The 68 acres was sold for 5 times the purchase price
in the last 3 years. However, I held it a long time.
I never bothered to figure it out but suspect I did pretty
well even with taxes and inflation added in.

We used a lot of this property personally, so you need
to take that into account also. Most of the land was
never improved or was zoned "ag". Taxes were not burdensome. Sorry I don't have exact numbers.

Never had a real "gotcha" on any of this, except once in a while you get an uninvited "homesteader".

I think my main handicap was that I got itchy and decided
I wanted to get the money out and move on. Thus, I never held on long enough, except for the aforementioned 68 acres.

John Galt
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Re: Raw land returns?
Old 10-25-2004, 08:43 AM   #3
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Re: Raw land returns?

My spouse and I are in a partnership that bought raw land in Florida which is now being sold. Doubled our money in 2 years. Very risking, so we did not invest a lot. Recently, we considered doing another Florida deal with the same guys, but decided to back off--worried about the "hurricane effect".

Like Galt, we own hunting land. We don't consider it an investment, but based on tax assessed value it has appreciated considerable in the last 5 years. Maybe it is time to let it go. Especially since I could give a *** about hunting.

Location, location, location.
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Re: Raw land returns?
Old 10-25-2004, 09:20 AM   #4
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Re: Raw land returns?

Ive done well on residential lots. I too have bought the 40 acres in the woods. Did OK on the woods but did real well on the residential lots.

The down side is you have to mow and pay various taxes while you own. The best way is if you can find a large tract and subdivide. This is more work but can really payoff.

You need to know your area and what things are selling for. Location is everything. Everything seems high right now with the low interest rates and the building is going nuts around here. I have some land I bought 3 years ago, 5 acres, for 5,000 an acre, I divided it up and have sold it for over 30,000 an acre.

I bought some 1/2 acre lots in town and doubled my money in less than two years. I havn't been able to buy any others because I think that this cant continue. I bought the land as an investment but didn't think it would appreaciate this quickly. I got lucky as I paid the going price for the lots at the time. I got a very good deal on the acreage though.

And this was in Missouri.
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Re: Raw land returns?
Old 10-25-2004, 11:01 AM   #5
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Re: Raw land returns?

Yes, I agree that prices are mostly out of hand. I have no immediate plans, per se, but I do like to keep an eye out.

What I was kind of thinking about was what might be referred to as "hunting land" (even though I do not hunt). I was just interested in what typical returns are in case I ever had to liquidate such a thing.

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Re: Raw land returns?
Old 10-25-2004, 03:43 PM   #6
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Re: Raw land returns?

A general take from someone watching values for a possible investment myself. Here in Colorado, general raw land as in the 40 acre ranchettes has probably done about the same as inflation depending on the area. However any ranchette type half-way near a ski area or near Denver is doing double digit increases. At the same time residential non-resort regular housing has been stagnate for the last 3 years. Not so sure about smaller sections of land in 1/2 acre range as it's not something I've watched. I suppose it comes down to the "location, location.." adage.
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Re: Raw land returns?
Old 10-26-2004, 06:23 AM   #7
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Re: Raw land returns?

Has anyone bought farm land and rented it out? Or, purchased land and placed it in the goverment PIC (sp?) program? If so, how did it work out for you? Were they worthwhile investments? Thanks.

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Re: Raw land returns?
Old 10-26-2004, 11:36 AM   #8
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Re: Raw land returns?

Quote:
Has anyone bought farm land and rented it out? *Or, purchased land and placed it in the government PIC (sp?) program? *If so, how did it work out for you? *Were they worthwhile *investments? *Thanks.
I haven't rented farmland, but my father does. Here's a link to a comparison of farmland values in Iowa vs. the stock market.

http://www.extension.iastate.edu/agd...DuffyMar02.htm
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Re: Raw land returns?
Old 10-26-2004, 11:57 AM   #9
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Re: Raw land returns?

There are a lot of 'rent out the farm' opps here in northern CA. A lot of real estate listings look like "25 acres (walnut or peach are most common), 2500 sq ft house, $850k, farming agreement for walnuts in place, owner provides water". Basically they outline what you have to provide as an owner, otherwise the people who made the agreement with you do all the management and harvesting and write you a check.

I looked at a couple...if you want the land for future purposes like subdividing it and selling to developers it might be a decent long term deal, but otherwise the annual income was kinda meager.

The other inconveniences (if you're living on site) is bug spray, a lot of dust, and a bunch of heavy equipment running around on your property, often before 7am.
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Re: Raw land returns?
Old 10-27-2004, 04:52 AM   #10
 
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Re: Raw land returns?

Well, I certainly can not speak to long-term returns from
personal experience, but my feeling is that, as far as
raw land is concerned, waterfront is the place where
the best chance of appreciation is.

To that end, last Friday I closed on 7.5 acres of
lake-front property in Western Missouri, which
I bought through a trust which holds some of
my IRA money.

If it does not appreciate significantly, at least it
is a place where I would not mind retireing
"some day."

I will let you know in 15 years how things turned out
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Re: Raw land returns?
Old 11-08-2004, 02:21 AM   #11
 
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Re: Raw land returns?

Gonna have to face it....I'm addicted to real estate.
My apologies to Robert Palmer. I miss him.

Having just sold a small parcel in Texas, I have a little
cash for a change. I am going to buy a boat soon and
have been looking quite a bit. Anyway, I was recently
checking out boats for sale, kicking motorcycle tires and
looking at real estate deals (ain't ER grand?)
With all that cash sloshing around in my pocket I soon found a nice boat, but also 5 adjoining lots in a nice sub-division, just off the water. Both looked like great deals and I expected to make them even better by
hard bargaining. Then I got to thinking. With the boat
I would have fun of course. But, I also get maintenance,
licensing, insurance and storage issues, etc., while it depreciates.
With the land, I only get a small tax bill while it appreciates (no hassles in other words). I can't do both
right now,
and so far have done nothing. The point is that I see
so many no-brainer real estate deals it makes my head spin. Why, if I was 20 years younger I could make a fortune. Guess if I was 20 years younger I could do a lot
of things.

John Galt



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Re: Raw land returns?
Old 11-08-2004, 03:45 AM   #12
 
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Re: Raw land returns?

"...I soon found a nice boat, but also 5 adjoining lots in a nice sub-division, just off the water. Both looked like great deals and I expected to make them even better by hard bargaining...."



I would go with the real estate; or at least real
estate over a boat.

Not that I have anything against boats; I am a life-long
pleasure boater, and for several years made my
(meager) living as a deckhand and then a pilot onboard
small tugs. I am still employed in the commercial
marine industry in an office capacity.

I would just LOVE to buy an mid 60's Chris Craft
Commander 38 foot express (without flying bridge)
repower from the old Ford big-blocks to a pair of
new Crusader 350 inch 290 hp, and play every
weekend.

But the cost of gasoline and dockage and maintenance
always gets in the way of my daydreams.

So instead, I invest what money I have, to the best of
my ability, and satisfy my boating needs with small,
homemade boats built from cheap plywood and powered
with very old outboard motors. They cost little enough
to build, are stored at no cost on trailers in my driveway,
and are covered for liability under my homowner's
umbrella policy.

There is a cliche going around in home-built boat circles
that the smaller and cheaper the boat is, the more it
is used. Of the four homemade boats that I have built,
the most used is the smallest, a "touring" kayak (not
the kind you roll-over in).

I enjoy your posts, Mr. Galt.


Capricious
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