Real estate advice needed

[NuclearNed]

Mrs Ned & I are looking to buy vacant land in a small resort town in the western US. The idea is that when I retire in 10-15yrs, we'll sell everything here, then go out there & build. We took a vacation in this town in September (been there many times previously). Unfortunately, the local real estate market had a massive boom about 3 weeks before our trip. Property prices nearly doubled overnight.

Our budget is $100k. Most of the properties we really like are now in the $100k-$150k range. The same properties were ~$65k-$75k when we first started looking, so we have a problem...

There is a property that we looked at in September. It has been under contract, but a couple of weeks ago the deal apparently fell apart. The owners are still asking the pre-boom price: $43k. It isn't our ideal property, but it is nice & actually has a lot going for it. It lacks one thing: a great view, but otherwise, I would probably be happy if this ended up being the property on which we build.

So we're thinking about placing an offer - hoping to get it for $40k, 100% cash - no financing. My thought is that buying this property at very least gets us in the town we want... and if one of the properties that we would rather own becomes available in our price range, then we could sell this one - possibly for a small profit because the market is hot - and buy the better one. I could see us making this type of "trade" as early as this Spring.

Does anyone see a downside to this plan?

 

[IronWing]

As long as the property has water (physical and legal), mineral rights, legal access, and it isn't going to burn, it sounds reasonable.

 

[NuclearNed]

cool - thx. Hopefully other ATOTers will chime in with their opinions. I realize that I didn't make something very clear. The market has gotten so hot in this area that I have a realistic fear that if we don't buy something soon, all the properties that are within our budget will literally be gone. At least until the next time the economy crashes...

 

[MtnMan]

Where property is in high demand because of being in a resort/retirement ideal area, you will find that construction costs are also proportionally higher.

On the flip side, they are no longer making more land, and if nothing else it might be a great return on the dollar.

 

[NuclearNed]

yeah - the construction costs are crazy high out there - we were told it was because of the recent boom. Hopefully it will cool down in the next 10-15yrs

 

[Red Squirrel]

If this is in a normal city area keep in mind you will need to pay taxes on it, and probably be required to build within a certain time stamp. If this is unincorporated/unorganized township then that's less of an issue.

I've been wanting to do the same as I want to eventually live off grid, but only looking in unorganized township myself to avoid the headaches of needing a permit to build and having to abide by bylaws etc.

 

[highland145]

And the blue wave moving that way. 10 years from now is a long time.

So...can the buyer of your place get the retired T1000, too?

 

[Scarpozzi]

I agree that 10 years is a long time. Quiet places can get noisy in only 3-5 years. I agree with your logic though because warehousing cost of land is pretty low and comparable properties in the area will all follow similar valuations.

Since you say it's so expensive to build out there, consider going with pre-manufactured modular housing if you have that as an option. Basically, you have someone setup your foundation and your home is assembled in a climate-controlled warehouse in sections. They deliver it to the site on flatbed trucks, bolt it together, connect the utilities/flooring/walls at the seams and you move in. It would give those local lumber yards and contractors the finger.

 

[PowerEngineer]

Well, I would think carefully about how certain you are that this is the place you will want to retire to in 10-15 years. If this small resort town is now being "discovered" and then goes through a decade long boom (e.g. Bend, Oregon) then it may change quite a bit before you move there. Good luck whatever you decide.

 

[Scarpozzi]

Well, I would think carefully about how certain you are that this is the place you will want to retire to in 10-15 years. If this small resort town is now being "discovered" and then goes through a decade long boom (e.g. Bend, Oregon) then it may change quite a bit before you move there. Good luck whatever you decide.

Covid is killing off Oregon and Washington.....lots of ghost towns popping up out there soon.

I noticed he's reluctant to tell us where the place is to keep the bidding wars on that one cheap property to a minimum.

 

[Red Squirrel]

If it's not too expensive tax wise to hold the land, even if it does start to boom it would mean you can probably sell it for profit at that point, so I'd say it's not really a loss.

I would just consider the cost of holding it. If the city requires you to have hydro service, insurance etc, and with the taxes, water/sewer etc it all adds up. But if you can hold the land without paying all of that it may be worth it. You can always start building a bit at a time too if that is allowed.

 

[PowerEngineer]

Covid is killing off Oregon and Washington.....lots of ghost towns popping up out there soon.

I am curious to know what makes you think Oregon and Washington are being killed off any more than other states.

 

[s0me0nesmind1]

I would look into why the previous deal fell through and they didn't adjust their pricing.

Maybe it's a landfill of previously dumped nuclear energy or a massive load of cow dumps is underneath heh. obviously I have no idea, I just wouldn't presume everything is fine and well if prior deals were falling through.

 

[NuclearNed]

taxes are cheap on the land - around $400yr. There is no "build by" date, but we would have to pay someone to mow the lot every 2-3 wks per hoa rules. HOA fees are also cheap - currently only $50yr.

 

[Scarpozzi]

I am curious to know what makes you think Oregon and Washington are being killed off any more than other states.

The last time I travelled up there, I didn't see 1 person wash their hands.....including myself.

 

[teejee]

Well, I would think carefully about how certain you are that this is the place you will want to retire to in 10-15 years. If this small resort town is now being "discovered" and then goes through a decade long boom (e.g. Bend, Oregon) then it may change quite a bit before you move there. Good luck whatever you decide.

But in that case the price will increase so they can sell it with a very good profit and buy something else.

 

[zinfamous]

"Small resort town out west"

...are you and Ms Ned hoping to find Fredo's body at the bottom of a certain lake?

(Oh nvm...saw your budget)

But yes, I say buy the property now if you can, all cash, as IW said assuming it has all the necessary hookups, and at the very least, treat it like a small bank for yourself.

 

[NuclearNed]

Well... we didn't move fast enough. The cheap property we were considering is already under contract again. However, another slightly nicer property has gone on the market, so the basic plan may still be in play. It is $9k more, which makes the "trade" portion of the plan slightly trickier - we might not be able to trade up quite as quickly. I have patience + 10-15 years on my side though - I'm not in any rush to buy into something that doesn't work for us.

 

[NuclearNed]

Last night I did some reading on real estate predictions for 2021. They are all over the board, ranging from "apocalyptic crash is coming" all the way to "prices are going to go through the roof." Generally, a lot of predictions are calling for real estate to cool down around May. It would be nice - if those prices would go back down to what they were about 3 months ago, I could more or less pick any property I want in our target area.

People who live in our target area told us that the price spike is due to COVID. Apparently the pandemic has made big city folks think they want to move in to the country, and eat a lot of peaches.

 

[NuclearNed]

one other note - the reasons Mrs Ned & I are looking right now (10-15 years early) are 1) interest rates are incredibly low, & 2) we would like to pay off whatever land we buy before retirement

 

[rstrohkirch]

If this for retirement then that's your end game. Do you really want your last primary residence to be a location you're not happy with? If you want to buy in the next year or less then I'd be watching for new lot listings every couple of days until the type of property you want gets listed in your budget range. At that point in time you immediately buy it and not try to negotiate on it. Trying to negotiate for 3K on an 80k lot only to lose it is stupid. On top of that, even if the market were to crash 20% who cares when you're budget is only 100k. Stretch that out over the 10-15 years before you actually build and then decide if it's worth having a great location for your end game home or not. Plus you're building a home on a lot that's at least 50K. I assume the total cost for this home is going to be over 250K...what's 20K on that. That's not even enough to upgrade a real kitchen.

 

[NuclearNed]

rstrokirch - good points which we've already considered. Our fear is that if we don't get something in the area - even if it's not 100% ideal - we may miss out since the market is so hot. The trick is finding something that is good enough if it ends up being "the" property

 

[Red Squirrel]

HOA? That would be deal breaker for me honestly. I'm sure you can find something better that's not in a HOA. If this is for retirement, surely you'll want to have hobbies like working in the garage and stuff or building outdoor structures etc, and most HOAs prohibit that sort of thing.

 

[zinfamous]

HOA? That would be deal breaker for me honestly. I'm sure you can find something better that's not in a HOA. If this is for retirement, surely you'll want to have hobbies like working in the garage and stuff or building outdoor structures etc, and most HOAs prohibit that sort of thing.

Not everyone has dreams of living in a Unabomb cabin.

 

[NuclearNed]

In this particular town, everything is included in an HOA - even pastureland miles from the center of town. The few non-HOA props are sold for a huge premium. That said, I've read dozens of CC&Rs, and the HOAs are generally very permissive compared to the ones here in Tennessee.