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Wes Billups
09-11-2008, 3:43 PM
My wife and I have found an acreage which is right outside the city limits. We’ve always thought about this but just never found the right place. We love the location and the land, but won’t be ready to build for at least another 5 years. Our kids are currently 4, 2, and 1 so living on an acreage now doesn’t make much sense to either of us. My question is whether this is a smart move. All of the acreages around this one have existing homes so there won’t be anymore bare land sold in this area. The price isn’t great but you can’t beat the location.

I’m currently trying to get some more details on the cost of getting a well and electricity on the site. We’d like to do this sooner rather than later as there is an existing 33 x 40 pole barn on the land. Our plan would be to use the barn for storage and in a couple of years move my basement shop into the building. After this is all setup begin the house construction.

Let me know your thoughts on owning some land and just sitting on it for a few years. The only holding costs on the land will be the taxes. At this point our positive and negatives list is pretty one sided to the positive.

Thanks,
Wes

Rob Russell
09-11-2008, 3:50 PM
We just bought a beach house, mostly as a place that we can long-term use for retirement. To quote the real estate agent - location, location, location.

If you like the acreage, the location is where you want and there isn't anything else that will become available in that area - I'd say go for it. Land won't get cheaper and you may decide that you want to build and move there sooner than 5 years.

I'd be a little leery about using a barn for storage that you're not right next to because of the potential for anything valuable to disappear.

Greg Just
09-11-2008, 3:54 PM
I live north of Minneapolis and my wife and I purchased 10 acres about 2 years ago for retirement. It's a nice lot, 1/3 wooded with mostly oaks, poplars, maples and pine trees. The plan is to build in 7-8 years. We go to the property about once a month and have been clearing some areas, killing the poison ivy and planting seedlings to increase the privacy.

As long as your land is in a good area, it is really hard to loose unless you over pay in the first place. You mention the only cost being taxes. We were advised to carry liability insurance, just in case. We have a policy that not only covers our primary residence, but for about $120 a year, it covers the 10 acres too.

My advice is to research the area and recent sales to see if you are paying a fair price. With housing prices down right now, you might be able to get it for a good price. Even if you never build on it, 5-10 years from now it should be worth a lot more.

Good Luck

Belinda Williamson
09-11-2008, 3:56 PM
No personal experience but a customer of ours bought a 5 acre waterfront lot in the Ford Plantation about five years ago, intending to build on the site. They paid 875,000 for the lot IIRC. They decided not to build right way. Last year they were offered a little over 2 mil for the lot. If you buy the land and decide not to build I hope things turn out as well for you. BTW, they didn't accept the offer and still have the lot.

Jim Becker
09-11-2008, 4:23 PM
Even with the depressed RE market, I think that land in the right place is a good investment. If you like the location, then it's worthy of serious consideration. Be sure you understand the tax basis so your on-going costs are in the budget.

Justin Leiwig
09-11-2008, 4:34 PM
It sounds like a good idea, but make sure that you can have a well and electricity and all those things if you do plan on building.

I looked at some acreage outside of London, Ohio and was intent on buying it. However in the process of researching I found out that a Dutch conglomerate was building a mega dairy a bit down the road. They had passed all kinds of zoning reglulations trying to not let the dairy be built. In the process they pretty much guaranteed that anything bigger than a shed couldn't be built.

Just make sure that you research quite well the land as well as the area. Having lots developed all around it and not being developed could mean there is a problem that isn't necessarily disclosed.

Ben Rafael
09-11-2008, 4:47 PM
Basically, Can you afford it?
Crunch some numbers, what if the value of the land drops by 50% and you need to sell it for some unforeseen circumstance? Is that a problem? Is land easy or difficult to sell in that area?

David G Baker
09-11-2008, 4:50 PM
If there is enough land to qualify as farm land you can get all kinds of tax breaks as long as you do a little farming on it. If the price is fair and you can afford it, go for it. Having vacant land can be a liability if you are in a tight financial situation because there no income being derived from the property. Buying property with a rental house on it that you can rent out, get tax write off and with some one living on the property there will be some security.

Matt Ocel
09-11-2008, 5:08 PM
Wes -

1) Is there a building permit available for that land?
2) Can land be subdivided?
3) Have "perc" tests been done for septic?
4) Has there been any soil borings taken?
5) Is there a location for a home where there will be good drainage?
6) How close are you for small utilities to hook up to?

I would have to know the answers to all of these questions before I made a move on an acreage lot.

Cliff Rohrabacher
09-11-2008, 5:21 PM
You gotta do your homework.
If the demographic picture you can draw looks to growth then yes it's a smart move financially.

If on the other hand you want a lot of space for you and your kids to be on then the other factors slip into the background.

But for a financial decision ya gotta do the demographic research. Go to the county and get the numbers of new home starts
and sales of existing homes. Find out who is tracking jobs and business data and get that.

Mitchell Andrus
09-11-2008, 7:23 PM
For a purely mechanical side.... pretend you're applying for a permit to build whatever you're thinking about. Can you do it? Is the a move in the county to close down all contruction? You may wish to buy subject to approval to build and get the permits in hand prior to closing on title. Then, keep the permits current. Even if you decide to sell, the permits are an asset.

Randy Cohen
09-11-2008, 10:04 PM
Is this easily affordable or will it put a strain on your budget? How long has the land been on the market? What is the septic situation? How much does it cost to bring power into your building site? How much land are you talking about here? Is there water available? What are the schools like?

Ken Fitzgerald
09-11-2008, 11:47 PM
Wes,

You kids are young now. In another 10 years, they'll be eating more of your budget...in another 15 years even more.....

See if it will fit your budget.....make sure both you and your wife are completely in agreement.


Don't be "house poor". We bought a house in Oregon in 1977. 18 months later we sold it and bought one in a Chicago suburb. We had to pay almost twice as much for the house in Chicago-land. We were house poor. We made our bills.....were able to do somethings but.....

When we moved to Idaho from Chicago.....I made sure we weren't house poor. It was a good thing too......Teenage drivers...gas....a 2nd personal car....insurance....college tuitiions.....

Crunch the numbers.

Tom Godley
09-12-2008, 9:29 AM
As others have said you need to crunch the numbers prior to the purchase.

If this land is "The" place you must live in the future - then the importance of it increases dramatically. I have encountered individuals who had to live in a particular place and made mammoth changes in their lives to accomplish this.

I believe it best when thinking outward, especially more than 5 years, to look at these things as investments - does the land purchase stand on its own as an individual investment? This way, as things naturally change, the land does not become a noose!. It also allows you to project outward at various time points to determine how much the land must be worth to break even.

Not knowing your financial situation - you may have the funds to just purchase the land -- with only minimal cary costs. The decision is much easier.


The situation I have found people getting them stuck in is the following:

They are working and doing well - have some money saved - sometimes they inherit little more. They then decide to purchase a second property with a mortgage. Even without buying too much house people often underestimate the actual costs of keeping the second property. The other item is that they do not take into account that the extra money that they preciously had to add to there savings is now going to the second purchase.

This can be disastrous if income drops or when family expenses increase.
Or.... like the present situation when the value drops and the anticipated sale price evaporates.


We all have a vision of what the future will be -- mine has never been correct-!! I have found - for myself - not to project too much into the future. So buying land with the "intent" of building would not be me - I would want to buy and build ......... we are all different :)

Wes Billups
09-12-2008, 9:38 AM
Thanks for all the feedback. I probably should have included some more detail in my first post. This land shouldn't be a financial burden. My wife and I have saved enough outside of our retirement accounts to pay cash so our only holding costs would be the taxes and any the increase in liability insurance someone brought up.

The land is a 5 acre plot. It’s already been approved for a leach septic system and building site by the county health department. The current owners planned on building but their circumstances have changed and thus they are trying to sell. The thing that my wife and I really like about it is there is a stand of about 1.5 acres of large trees on the back of the property. This area’s too low to build on but would be a great place for the kids to play when they get older and also shield us should a development pop up in the field behind.

Here’s a satellite image of the land with it’s lot lines. This image is from 2006. There is now a home on the property just above (north) of the one we’re looking at. To me this is a positive as we now know what kind of properties will be around us. There are also quite a few young trees in the middle we would plan on getting moved near the road.

Based on everyone’s input here I think we’re going to make an offer. I’ve heard a complete well system around here will run $4000. Anybody have ideas what an overhead power line would cost to the barn which is approx. 150’ from the road. I’d also be interested to hear what a leach type septic system costs. I’ve told my wife to expect to pay $20-25,000 for all the utilities (water, sewer, and electric).

I grew up on a farm and really want my kids to experience a similar childhood. This is probably the greatest driving factor in looking at acreages.

Thanks,
Wes

Von Bickley
09-12-2008, 10:43 AM
Wes,
You've already said you can afford it. I would say go for it. They are not making any more land and 5 acres would be nice to build on.

Around here, a 4" submersible well & pump will run about $3000 - $4000. That would be up to about 100 - 120 feet. If you have to go much deeper, then the cost would go up. It would also cost more for a 6" well that is required if you have to drill in rock. Check around and see what kind of well your neighbors have.

If your well will be close to the existing building, you could go ahead and put some temporary wiring in the building to have power for the well. If your future home site is close to the building, you could go ahead with a septic system and even put a small bathroom in the building that could be used during the site preparation and building process.

A septic tank system in this part of the country will run about $2500 - $3000 for up to about 200 - 300 feet of drain field.

Hope this info helps..... Go For It..:)

Edit:
Wes,
Check with your local power company to see what it will cost. I live in the country and they don't charge us to run power to the building and make your connection. They only charge if you want them to run the cables underground. You could put temporary power in the building for several hundred dollars if you can do it yourself.

Scott Coffelt
09-12-2008, 10:54 AM
Just do your homework, go to the city and find out all you can about it. If they have begun the work make sure there is no surprises. You already answered the one key question I have, can you afford it. If you have everything else paid for... carrying no debt, then it seems to be a no brainer. If you are paying interest on stuff (i.e., CC's, etc.) you'd be better wise to spend the cash on those. But based on the fact you are talking paying cash, my guess is you've got everything covered. Also, since you'dd have miner expenses (taxes, etc.) in the mean time, you can save to pay cash for all the other things that come along. In the end, hom emarket will come back and if you decide not to build, my guess is you'll get more than you paid for it, then. I seriously doubt the value of land will fall. In the mean time you can also begin to draft plans of what you would like to build. Living on acerage is great for kids of all ages, so you never knwo you might be there before 5 years anyways.

Tom Godley
09-12-2008, 12:48 PM
Von - How I miss SC


And the costs!! I think the permits would cost me 3k -- All my quotes are 25K to 30K

:( :(

Scott Loven
09-12-2008, 1:18 PM
I had to pay $700 extra for underground electric, well worth it not to have a big ugly pole in the yard and wires running to the house.

Scott

Ed Labadie
09-12-2008, 1:37 PM
I have a friend that does septic systems, 300' is running around $4000.00 with no tank. Material prices have skyrocketed in the last 2 years, the stone used in the trenches is now $27.00 per yard, delivey is extra.

Check with your county/township about building a pole barn on the property, they will not allow it in my county anymore, you have to build a house also.

Ed

Jim Becker
09-12-2008, 3:05 PM
LOL....now that you've posted that map, Wes, you better jump on this before someone else does. From your description, this is a nice opportunity, especially since you've already worked through the details. No debt is also a plus as this potentially is a better place to have your savings over time than many other financial instruments. (That might be rocky for another year or so, but ultimately, good real estate is a nice investment)

I agree with Scott...might be worth paying a little extra for the trenching and conduit to bring in the electricity and other utilities. Easy to dig now, too, since there's nothing "in the way".

Jim Becker
09-12-2008, 3:11 PM
Geepers, Von...I was in the same boat as Tom. Here, even with an in-ground (but pressurized field), the cost for the septic system was $17K in $2000 and we just had to drop another $15K total to get it updated to larger when we added the addition to comply with the "bedroom" rules! Wow...SC's sandy soil sure isn't making the septic folks rich...

Wes, the fact that your leach field can be subterranean is a good factor in keeping the cost of a septic system down, especially if it perks fine for gravity. When you get into pumps and pressure, the price goes up quickly. That's what we need around here due to the high clay content in the soil and poor perks. Most systems are sand mounds. The only reason we're subterranean is that in the lee of the mountain behind our home, there was 8' of soil that perked "marginally". We still needed pressure, but not an above ground mound. In effect, we have an underground sand mound, however...just without the big bump.

Pat Germain
09-12-2008, 5:16 PM
My brother purchased a bare, 5 acre lot last year in Oklahoma. Things are different everywhere, but you can be sure there will be surprises. Some things my brother learned in his area:

- The power company will provide a buried line, but only if you build a "permanent structure". Since my brother moved a trailer onto his land, he got above ground power. He had to install a pole.

- Every company he talked to about installing a septic system would do so only if they provided the tank; at a very high markup. My brother bought a tank from the manufacturer at a significant discount. They even delivered it. He rented a trencher to dig the holes and bury it and still saved big bucks.

- There is no natural gas available where my brother's land is. He installed a propane tank. All the local propane contractors would sell him only a new tank at a significant markup. He went to another county and purchased a perfectly good, little used tank and had it delivered at a significant discount.

- Bro soon learned the price of propane goes up with the price of gasoline. It's over $500 to fill his tank and it doesn't last very long in the winter. :eek:

Many people have purchased land and learned later they could not build on it. Heed the advice you've seen here and research, research, research. There are just so many things to preclude you from building; zoning restrictions, sight line restrictions, fire protection restrictions, well restrictions, environmental restrctions... Shoot, if any part of a lot has water on it at any time during the year, it can be considered "wetlands" which prevents development of any kind.

If everything checks out, that looks like a great property!

Eric DeSilva
09-12-2008, 6:20 PM
I bought a large lot a few years ago, and only now am I in the process of building on it. It has been much more of a challenge than I thought--be prepared for the unexpected. Couple oddities I experienced:

-- Hidden tax value. The land I bought was adjacent to park land. I ended up writing up a conservation easement for the property that limited future development. It gives me the right to put my house up, a guest house, associated buildings (garage, workshop, etc), but precludes future subdivision or development beyond that. It also requires me to comply with certain things like using night sky friendly lighting and limiting the height of buildings to the effective tree cover (not too hard). Since I didn't want the land developed, it was the sleeves off my vest. But, I got a federal tax deduction for the difference between the value of the land pre-easement and post-easement. I also got a VA tax *credit* for 50% of the value of the easement. So, figure the appraised value was $8X. The value post-easement was $5X, so I got a $3X deduction--figure its worth at least $1X against future taxes. I also got a $1.5X tax credit, so I donated $3X in value and get $2.5X back in--effectively--cash. In my case, in the time I'd held the property, it had actually appreciated from $5X to $8X, so when all was said and done, I still have a property worth $5X, but I've effectively now paid only $2.5X and haven't given up anything I care about. Plus I did something good for the environment and green space preservation.

-- Permitting is a PITA. I ended up building a timberframe. Based on representations from the county, I had the frame delivered in January of '07. The county delayed issuing the permits over and over and over. Every time they wanted something else that they hadn't told us before. I don't know if this county is like yours, but my frame sat out in the woods until July before they could start putting it up. So, count on big delays. (Granted, I was building on undeveloped land that had relatively steep slope issues).

-- Cost overruns/upgrades can ruin your budget. Budget at least 50% for upgrades that you have to have as you progress, as well as for things that the builder won't include--I had to post a $30K bond with the county, fill dirt for the site cost me another $25K, a retaining wall cost $10K... None of that stuff was in the original budget, largely because the builder can't predict it either. Ouch. Just have lots of cash when you go to build.

Good luck!

Mike Wilkins
09-15-2008, 9:31 AM
My old high school classmate who now does land surveying once told me, "you need to get some of this land, they're not making any more". He was referring to some of the property my mothers' relatives were selling in Western NC. Sold for next to nothing. Now being developed for high end summer homes.
I'd say go for it. If you intend to move there in the near future anyway, the cost would likely be better now than in 5 years. If plans change, you can always put it on the market.

John Keeton
09-15-2008, 1:10 PM
Wes, couple of comments. Bare land rarely declines much in value and recovers very quickly when it does. God just isn't making any more of it.

On the other hand, residential land can decrease in value for many reasons. The decision on when and what to build can be made in the future.

The one thing that has not been mentioned is the land behind you. You mentioned the wooded area being a screen, but I would check on the zoning and the possible uses of that land. A sewer plant or hog farm would surely diminish the value of your investment, as would a heavy industrial use.

Other than that, go for it! We bought 68 acres and have never regretted the purchase.