Reality Check Needed

[Andy R]

I need a reality check from some of the wise folks on here (comments from the less wise also appreciated).

Background: I am 36 years old, our first kid is 8 months old and I have a long time before I will be FIREd. Obviously I have a lot of expensive years ahead raising a family. I am ahead of the curve when it comes to the size of my nest egg (for most people my age) but I am still a long way away from the finish line.

Dilemma: 10 years ago I lived in a cabin at the top of a mountain in Gilpin County, Colorado. I LOVED it up there, in the Aspen trees with the pure clean air. I used to stop at this one piece of land which had a short hiking trail out to this amazing knoll where there were 235 degree views of the continental divide. IMO, it was the best view and building site I have ever seen. I dreamed about owning this land and building a small cabin.

I went to the County Offices and looked up the owner on record and contacted her. She was 85 years old. Her and her late husband purchased the property when it was originally subdivided over 40 years ago. She said she had no desire to sell, that she was going to leave the land to her kids. I contacted the kids and let them know that if they ever wanted to sell to please contact me.

Fast forward 10 years and the nice little lady recently passed away. The kids contacted me and it's time to figure out if I can afford to buy the land. I know I can dip into my savings to buy the land but I am torn on if it's the right thing to do in the long run. The land is in the lowest taxed county in Colorado because the nearby casinos generate considerable tax revenue. So the tax burden on the property would be minimal.

A land loan would take a considerable down payment, probably 50%. I am better at paying things off then saving money so at least it would be a challenge for me to pay off the other 50% as fast as possible.

I feel that keeping the money in a diversified portfolio is the smartest long term investment but I simply love this property. When I stand there and breath the fresh mountain air and take in the view I am so content, it's magical.

I don't think we would be able to move there full time because the schools in the area are horrible. It's fairly remote and there are not any decent private school options either. After the kids are grown up (in 20 years) we might be able to spend more time up there. In the meantime it would be summers and vacations.

I have the chance to acquire this property (which has not been on the market for 40 years) during the current buyers market. I think I can get a decent price on it and it would be a FSBO transaction meaning we could save the commissions.

For the most part I am pretty good at deferring pleasure opting to save now and enjoy later. This opportunity has presented itself and I am seriously considering trying to nab this slice of real estate heaven (can you tell I admire it). Am I crazy for wanting to buy this land knowing that other investments will probably have better returns over the next 30 years? I know I am emotionally connected to this issue but should I allow the emotions to be part of my decision or just let the logical/calculated logic drive my decision? Any advice for someone like me who's facing a decision like this?

 

[REWahoo]

You'll likely always regret passing it up. Life isn't simply about making the best monetary choice every time. No way to know in advance if some other investment might turn out better in the long run, but how do you put an opportunity cost on living your dream? Many folks never get the chance to do what you are considering.

Buy it.

 

[FIREd]

If it's a dream come true, you should go for it and stop thinking of it in terms of investment returns, etc... If you miss that opportunity, it will probably never present itself again. Remote land rarely changes hands more than once a generation.

If you look at this piece of land merely as an investment opportunity, then comparing the return on this potential investment to others makes perfect sense. Remote land can be hard to sell.

 

[mickeyd]

Buying a chunk of raw land in the NC mountains was the worst financial decision that I have ever made. My main problem was that I moved away from NC and it then took me 10 years to sell it. Undeveloped land (even with beautiful views) can be difficult to sell.

 

[bbbamI]

Buy it.

Later on if you feel you no longer need it/want it....sell it.

 

[REWahoo]

One more thought: Maybe we can all chip in a little and you can purchase it as an ER Forum retreat. Put in a 50 amp RV plug and let me know when it's ready!

 

[Animorph]

Is it your DW's dream place also? Is the family happy spending much of your vacation time there? Is the financial impact large enough that it makes a difference to your family's lifestyle? Is it likely to appreciate in value enough to be considered an investment?

It sounds like a significant expenditure for your family, with a loan involved, and I'm not hearing that your spouse is excited with the purchase. Not a simple choice.

 

[W2R]

You'll likely always regret passing it up. Life isn't simply about making the best monetary choice every time. No way to know in advance if some other investment might turn out better in the long run, but how do you put an opportunity cost on living your dream? Many folks never get the chance to do what you are considering.

Buy it.

+1 I completely agree. If you don't buy it, you might become one of those sour, curmudgeonly old men when you get old, always grousing about the paradise you lost.

Of course I would suggest discussing the purchase with your wife first, and maybe the two of you can figure out a tentative schedule for repaying the loan early. Don't forget that you will have college expenses coming up sooner than you think. The two of you can also plan for that at the same time. But you need to somehow figure out a way to do both because this land has been a dream for you, for so long.

Be sure to check and make sure that the adjacent land is not scheduled to be built on, or for any other usage that you might object to.

 

[Sue J]

Wow, what an opportunity!

Did the current owner ever do any improvements such as clearing trees or getting utilities? Is there an access road nearby?

You say that since it's remote and the schools are horrible that you'd only use it for summers and vacations. How would you use it? Primitive camping with tents? "Boondocking" an RV (I've been reading the RV topics here) or would you build a cabin/vacation house?

How far are you from Gilpin County, CO now? Is this a 1/2 hour drive? 1/2 day drive? Or is this a major trip from home?

I've never owned undeveloped land or vacation property like a lot of other members here. I'm not trying to discourage you since this seems like a great opportunity. These are just questions I had about doing this with a young family.

I have family in the suburbs of Parker, CO, and on a ranch in Elizabeth, CO (Elbert County) and a cousin who lives in the mountains outside Boulder, CO. My cousin in the mountains has an ideal place with spectacular views. It feels very rural but she's not far from the advantages of Boulder if she needs them. She's retired and her late husband had a business at home. They built their home with an attached rental unit so they always have additional income. And no school concerns since her kids were already grown when they moved there.

 

[Meadbh]

You didn't provide any figures, so it's difficult to guess how much this purchase would hold you back from FIRE. However.....you are clearly in love with this piece of land. It sounds gorgeous. You could bring an RV or tent there now, and later build a cabin. Or you could sell it later to a developer.

I have a friend who bought a piece of land that she fell in love with in the Muskoka region of Ontario. The goal was to build a lakeside cottage there. Her plans changed and she sold the land. No big deal.

A relative inherited a plot of land in a beautiful seashore location. For over 40 years, while raising a family, the land grew weeds. Finally they became FIRE and had the money to build a cottage. The entire family now enjoys it.

Your land sounds more remote than these plots. But the dream is the same. If the cost is doable, I think you should go for it. And, as ReWahoo said, some of the Forum members might be interested in buying a share!

 

[dex]

A land loan would take a considerable down payment, probably 50%. I am better at paying things off then saving money so at least it would be a challenge for me to pay off the other 50% as fast as possible.

Will the kids give you a mortgage with a lower down payment?

 

[ls99]

+1 for the buy vote.

 

[LARS]

Any advice without knowing the financial impact can only be of the "touchy-feely" nature. If the purchase represents 10-20% of your current net worth, perhaps it can be justified as an avenue of diversification. If it represents 50% or more that might be considered reckless IF your goal is to retire early. If your goal is to enjoy the process of life ( a laudable goal) than it might be the best money you ever spent...

Personally, I would not abandon all temptations along the way to retirement as you never no for certain if you'll amass enough to FIRE...

 

[WM]

It sounds hard to pass up, but my first question is, when's the last time you were there? It sounds like a lot has happened for you in the last ten years and I wonder if you'd be as enamored with it today. I agree with other questions about whether your wife is as excited as you are, exactly what you plan to do with the land if it's that remote, and how problematic it would be for you if you want to sell it later and can't easily do so.

Not saying don't do it, but those are the things I'd consider.

 

[Onward]

Any advice for someone like me who's facing a decision like this?

I know you wanted to hear from the wise people on this board, but I'm going to give you my advice anyway.

If I were you, I would buy the land only if owning it were much more important to me than FIRE.

IMO, if you're serious about FIRE, your diversified portfolio is absolutely untouchable, except to add to it & possibly rebalance. Achieving FIRE is all about resisting the dream-this and dream-that that come along regularly and threaten your FIRE portfolio, and thereby your ability to escape wage slavery, which, if you're like many of us, you will loathe more and more as you get older.

 

[WhoDaresWins]

Is it your DW's dream place also? Is the family happy spending much of your vacation time there? Is the financial impact large enough that it makes a difference to your family's lifestyle? Is it likely to appreciate in value enough to be considered an investment?

It sounds like a significant expenditure for your family, with a loan involved, and I'm not hearing that your spouse is excited with the purchase. Not a simple choice.

Andy...I agree with this suggestion. If your wife is not as enthusiastic about this purchase as you and is not onboard 100 percent, I would stand back and look at this commitment long and hard.

 

[Coach]

Your caution is wise, Andy. You'll have limited use now and a lot can change between now and the time you could think about building. That's a long time to carry the land. And since you're planning to keep it, I don't think you can think of it as an investment.

Something I really don't know anything about -- I heard Dave Ramsey tell a listener to never buy on a land contract. The impression I got is that unlike a mortgage, the title does not pass until the contract is paid out. In the meantime, if you have troubles you could lose everything you put in, or the owners could end up with a lien against them on the property. Something to definitely look into.

Coach

 

[Andy R]

Thanks for all the great feedback and things to consider. My DW also loves the area so she's supports buying the land but she's also just as content if we don't.

To answer a few questions, the land is remote in the sense it's on the top of the mountain with no neighbors in sight (5 acres). It's on a county maintained road with all utilities to the property including high-speed internet. The neighbors range from million dollar homes to not-so-hot double wide trailers since their are no covenants or HOA restrictions.

The land is not so remote that it would be difficult to sell (45 minutes to Denver & 45 minutes to Boulder). It's only 5-10 minutes to Black Hawk and Central City which are full of casinos. Although the casinos are pretty cheesy they also offer inexpensive dining options and sometimes they have some decent entertainment.

I love the idea of a RV Hookup and camping until the time comes to either build or sell. That would offer a great way for us to enjoy the property before deciding how to proceed.

I guess it comes down to the price the sellers want for the property. If we can negotiate a reasonable price then hopefully it will work out. If they are asking an inflated price for this market I'll have to exercise discipline to not let myself get trapped into an emotional situation of overpaying.

 

[Katsmeow]

Something I really don't know anything about -- I heard Dave Ramsey tell a listener to never buy on a land contract. The impression I got is that unlike a mortgage, the title does not pass until the contract is paid out. In the meantime, if you have troubles you could lose everything you put in, or the owners could end up with a lien against them on the property. Something to definitely look into.

Coach

You can buy land and have title pass immediately just like anything else. I am assuming he is getting financing from a bank and not the seller. You can buy property on a contract for deed where title doesn't pass until paid for. I don't recommend that but it isn't typical anyway.

For the OP -- I second the suggestion to go look at the land and surrounding area before buying.

 

[NW-Bound]

Andy, the area of my 2nd home on the AZ Mogollon Rim is like your land, in that the current owners want to hold it for their children, and usually do not want to sell. In addition, due to the hilly nature, not two lots are alike. My builder contacted several lot owners wanting to buy more to build, only to be told that the lots were not for sale, and that he should stop bothering them!

About your lot, since you knew the area and wanted this particular lot 10 years ago, the chance is high you will kick yourself later if you pass this up. A reservation I would have is that it is a long drive from where you live now. Will you be able to get some use out of it, even with an RV?

Anyway, your last post indicated that you were going to proceed with reiterating an interest, and querying about the price. As others have said, I would make a trip to look the land over, to be sure no detrimental development has occured in the last 10 years.

And REW, why 50A? Without AC requirement, a 15A outlet would be sufficient, for crying out loud. What do you do? Stringing Xmas lights all around the RV?

 

[REWahoo]

And REW, why 50A? Without AC requirement, a 15A outlet would be sufficient, for crying out loud. What do you do? Stringing Xmas lights all around the RV?

The hot tub requires a lot of juice.

 

[sailor]

1. [-]What does your DW think about it?[/-] Never mind I should have hit refresh to read your message above
2. Will you let us camp there when you buy it?

 

[bssc]

We own land in Fremont County, CO so I am biased towards Colorado. I would say go for it.

 

[clifp]

If you (and the wife!) really really really want it go for it. But just because somebody else buys it now doesn't mean it is off the market permanently. In 10, 15, or 20 years from now you'll be in a better position to take advantage of the place. The land isn't going anywhere the new owners maybe be willing or even anxious to sell. Sure the price may (hopefully will be higher) but will be a lot higher who knows.

 

[Westernskies]

Buy it!

I owned a 500+ acre ranch in Wyoming for 15 years; it was a childhood dream that never went away. If I had passed on the opportunity to buy it when it became available, it would have always been "the one that got away".

You only go around once; grab the ring!

WS