Buying land now?

[Mitch schiffer]

A 7 acre parcel next to one of my properties came up for sale recently and im considering buying it. I am concerned about the market and I know I won't qualify for a traditional mortgage because I make no money on paper. For a little back story the parcel is connected to a building I own. The building is a old jail built in the late 1800's. I really like the history of the building and want to do something with it that others can enjoy. Im thinking a BNB. The jail needs a good bit of work but it is rented to a older couple that lives there full time currently. The idea with buying the parcel would add some walking trails and a place to have a fire or other outdoor activities since the lot the jail sits on is pretty small. The jail looks over the Mississippi River and does have a nice view, however the parcel goes up hill and at the top has a fantastic view for miles right on a bend on the Mississippi River. There is a road that separates the jail from the river so its not actually waterfront. The parcel is listed at 75k. I have approached the seller and they are willing to do a land contract with a 2 year term. I would give them 15k upfront and a monthly payment for 2 years. At the end of the 2 year term I would owe the balance. This makes me a little nervous with interest rates increasing i am not sure what the market will look like in 2 years. I also have many obligations of my time and won't get to actually doing this conversion a BNB for a few years. Its a long term play for me. Im just looking to see what a group of unbiased individuals think of this idea. I don't owe anything on the jail I bought it off market for cash a few years back. In my experience with the area I live in its pretty rare to have a seller agree to any form of land contract on vacant land and this it the only parcel that connects to the jail so it really could be a one time shot and doing this. What would you do if you were facing the same decisions? I have attached a few pictures of the views from the lot as well as the rough property lines. You can not see the jail in the aireal shot but it would be on the short side of the 90 degree angle. The hill is walkable but would need some work to make it safe for the average person to go up there comfortably.

478930478931478932

[Bruce Wrenn]

In our neck of the woods, $75K wouldn't even buy you a acre lot. House next door (on 3 acres) just sold for $555K, AS IS! Previous owner paid $185K for it in 2002. Your parcel has what is called a "million dollar view."

[Ronald Blue]

Is that Desoto by chance? Looks familiar to me. I worked on equipment there if so. I worked most of that line from Savanah Illinois to Prescott Wisconsin years ago. As for the purchase of the land. Everything we do is a roll of the dice in one way or another it seems.

[Mitch schiffer]

That was a good guess from a few pictures! It is de Soto. I own the old grocery store there as well that I will eventually move my shop and house into. I really like the town.

[Mitch schiffer]

In our neck of the woods, $75K wouldn't even buy you a acre lot. House next door (on 3 acres) just sold for $555K, AS IS! Previous owner paid $185K for it in 2002. Your parcel has what is called a "million dollar view."

I understand it is a regional issue. There are several 500k and up houses on these bulffs most are on about 2-3 acres. The houses you see in the town are mostly around 150k

[Don Orr]

Not an expert here but I think it would be wise to do whatever it takes to acquire this piece of property attached to something you already own before someone else does and does something you don't like with it. 7 acres for 75k to protect your long term plans seems like a good deal to me. Looks like a real nice area.

[Christopher Charles]

How would you feel if someone really unpleasant bought the property? That said, make sure you are fully protected ic you go the land contract route (get a good lawyer to rebut he agreement). That view is a good one!

[Scott Winners]

I was just looking on acretrader dot com, never had been there before, they were saying farmland in WI is pushing $5k per acre. Your guy is asking $10k per acre. That parcel could be developed, maybe, several houses put on it, and might be worth $10k per acre to the right buyer. There is also, as Christopher pointed out, the possibility of a bad neighbor moving in.

If there is zoning possible, what about putting a couple or three rental properties where you can/may put in a road and then keeping the rest of the land for the BNB project?

Just asking. It is more than I would want to take on this late in my life, but were I 20 years younger it would be hard to pass up. Also the question of how much of the $75k would you have paid off in two years? If you have the cash flow to own it free and clear in the 2 years of the contract I would be signing today.

[Greg Parrish]

Our house in Florida sits on only 0.15 acre and based on tax records the value of that 0.15 acres is around $80k of our total home value. $75k for 7 acres that have good location, view and usability seems like it could be a good price when compared to our deal.

[Tom M King]

Can you post a topo map of the area?

[Mitch schiffer]

Can you post a topo map of the area?

I can figure out how to do this on Google earth but I did get a couple of 3d images that show it a little better.

478946478947

[Mitch schiffer]

I can see the potential neighbor issue, but if someone were to build on it the structure would be a good bit away from mine. The top of the hill is the only build able area without a ton of dirt work. I guess my biggest issue with buying this lot is it would delay my availability of funds to work on my shop/house project. If the market falls if will be hard to get a loan for the balance, so I will have to save some of my extra cash over the 2 year period to pay it off.

[Tom M King]

I'm not seeing a great investment opportunity in that.

[Ronald Blue]

https://topobuilder.nationalmap.gov/

I tried to do a screenshot but it's to large for posting.

[Jim Becker]

7 acres here would go for nearly a million and there would be no view of the river. For $75K, that would be a no-brainer for me, Mitch, if you can afford it. I like your idea for developing the property into something special, too. The one thing I'd look at very carefully, however, is the floodplain data, including 100 year and higher historic events for the entire property.

[Bill Dufour]

Wonder if you could buy it and donate the unusable portion to the country parks for a tax deduction.
Bill D

[Mitch schiffer]

7 acres here would go for nearly a million and there would be no view of the river. For $75K, that would be a no-brainer for me, Mitch, if you can afford it. I like your idea for developing the property into something special, too. The one thing I'd look at very carefully, however, is the floodplain data, including 100 year and higher historic events for the entire property.

Luckily the river in this area is over a mile wide so the water says a constant depth. Neither of these are in a flood plain.

[Ed Aumiller]

Do you have any road frontage?? Is it land-locked?? Will you have to use your existing property for a right of way to it ??

[Frederick Skelly]

I would buy it if you can make the payments. They arent making any more land. Plus it ties to property you already own. They only way you can go wrong is if you cant afford to make the payments or pay the taxes.

[Gary Ragatz]

Beautiful area. I grew up about 50 miles downriver from there, and I have a couple of high school friends who built homes up on the bluffs - gorgeous views.

That said, the property was listed for $150K in December, dropped to $125K in February, and now $75K. If you want to invest, offer $50K and see what they say.

Just my opinion, but I wouldn't wish ownership of a BNB on my worst enemy.

[Alex Zeller]

It's hard to tell just how steep the land is. You did say there was only one building site without lots of work. To me that's kind of a turn off for most people who might want to put more than one house on it. For the one site that is there how easy is access to things like power? What about a driveway? Would it be like driving straight up Everest or be unusually long? I tend to be a hoarder but I'm realizing that it's not always a good thing. With land comes property taxes. Last week I got an offer on an 18 acre lot I own and my first reaction was no. But once I started to think about it I do almost nothing with the land, just walk on it and take a few trees for firewood, yet pay taxes every year. It's at an all time high in value and with the possibility of a recession coming up it'll drop in valve. It could be a decade or more before it reaches it's current value. Of course I'll be paying taxes all those years on it. Now I think I'm going to talk to the person who made the offer.

[Mitch schiffer]

There is a road up to the top of the hill and the land at the top is reasonably flat. It is not land locked. And there is power to the property. There are some very steep part and others that are walkable. I haven't explored every inch of the land but I do think you can walk to almost every part of the land.

[Michael Schuch]

So the seller is betting that you will miss any single payment in the next 2 years or not be able to finance it in under two years from now and they will walk away with your $15K and monthly payments and the title to the land. It sounds to me like the odds are in the favor of the seller especially since you don't have any documentable income.

If someone offers you $100K cash a year from now will you be able to sell the land and walk away with the profit? Would you? Make sure your lawyer confirms that you can do so before signing.

I am betting that 2 years and 1 day from closing the seller will send you notice that you have no more claim to the land and I doubt they will give you even an extra hour to come up wiith the funds.

I would bet that it will take a whole lot more than $75K to make the land profitable for you to the tune of being able to pay for itself. A B&B sounds nice but how much will that actually cost to pull off... realistically? You don't sound like you have the time resources to pull off a B&B even if you had the financial resources to do so.

I would also bet that interest rates will be double or more than what they are now,

Only you know yourself, your resouces and your follow through to know if you can make the deal work. Honestly if it were me I would pass. I don't know how I would find a loan in two years without being able to document income. I reccomend that you figure out how you are going to pay the balance 2 years from now BEFORE you sign the papers and hand over any money.

Some people are gamblers. I am not. I would not fork over $15K without knowing how I will pay off the balance in 2 years? You didn't mention what the balance will be 2 years from now? $75K? $75K - $15K - any payments you make? Is the seller going to charge interest on the loan?

$75K for seven acres with a wonderful view and power to the property... why are people not lined up around the block with offers on the 7 acres? Is there $100K in back or deferred taxes owed on the property? Without a sale and a title search and title insurance how are you going to know what leans are currently attached to the property?

[Scott Winners]

Michael makes a ton of good points, esp this one:

"I would also bet that interest rates will be double or more than what they are now," ...{two years from now}

If you can pay that off in two years, do it. If you are going to have to refi in two years, that, to me, is a problem. The number of dollars in circulation has doubled since March 2020. Wages are not keeping up, but prices are working on keeping up.

[Rick Potter]

Is the property accessible without going through your property? Are you the only one who could benefit from it? How much will you benefit from it?

If you have no real use for it other than making walkways, who does? How many options to sell does the owner have? Have they directly contacted you?

Property values vary widely, but in perspective....I looked at an F150 the other day that cost about the same.

I would make a lower offer, and see what happens if you decide you need it.

[Jim Becker]

In reading Michael's reply, as much as I like the ideal of scarfing the land for that small price, he makes some very good points. The deal itself could be the problem. Be careful.

[Rich Engelhardt]

Beautiful area. I grew up about 50 miles downriver from there, and I have a couple of high school friends who built homes up on the bluffs - gorgeous views.

That said, the property was listed for $150K in December, dropped to $125K in February, and now $75K. If you want to invest, offer $50K and see what they say.
That is a huge red flag.
In a real estate market where everything is going up in price, an enormous cut in price like that has to be for a reason.

[Mitch schiffer]

I have an update to this if anyone was curious. I did get this under contract. Im buying it on land contract for a 4 year term. Here are a few pictures I took while walking the property. There are quite a few nice walnut trees.
480566480567480568480569480570480571480572480573

[Ron Selzer]

nice view
Ron

[Jim Becker]

That certainly has some views and very nice wooded areas. I hope this works out well for you.

[Clifford McGuire]

Beautiful!

[Bill Dufour]

Depends on your age and future plans. What will you do with the money instead of buying? IRS says $400 a month into a ira for each. How much will tax and insurance go up? etc
Bill D

[Jim Becker]

Depends on your age and future plans. What will you do with the money instead of buying? IRS says $400 a month into a ira for each. How much will tax and insurance go up? etc
Bill D
He already bought... ;)