Land Values

[M Nut]

Anybody have a crystal ball that predicts what land values will do in the future? My neighbor offered me his 40 acre parcel that borders/adjoins my 80 acres across the road from the home farm. It is about 10 acres open field, 10 acres pasture land, 10 acres heavy wooded, and 10 acres of swamp. It has a drilled well and new septic system in the past 5 years, a 24x28 garage with a poured floor about 4 years ago, and a two bedroom mobile home in decent condition. Spent about $4,000 on installing a driveway in 2002. I know he paid $40,000 for the land alone in 2000, and then added the rest over the next few years. He offered it to me for $85,000. Just trying to decide what to do, as I have no use for the house at all, and really don' t need the garage or the septic. This is located in EC MN, with pretty good hunting and many lakes nearby, close to Mille Lacs too.
Think I should borrow the money and do it, or let it go to someone else? I'm pretty sure I can pay for it in about a 10 year time span. Just little nervous about new neighbors. Can be good or bad.

 

[joe from ne]

Myself I would buy it. You can choose your own neigbors that way. You might rent house out for decent money and pay the whole thing or at least part that way. My experience is that land usually only comes up for sale maybe once in your lifetime that joins your land. In Nebraska that would be dirt cheap.

 

[patiolant]

We went through the same thing with some land beside us a few years ago. Ended up borrowing the money to buy it so we had control over who our neighbours would be. Probably one of the best decisions we ever made. We have really enjoyed the new property, and it has worked out to be a good investment as well.

 

[JDseller]

It sounds like a deal. Around here that would be a deal. Plus as Joe said you can"t control your neighbors.

 

[Chris (WA)]

Buy it! You cannot grow land, esp ajoining property. I guarentee you will kick yourself if you do not!

 

[LeonardWD45]

At $2000 per acre, buy it. For me this is a no brainer. Land out by my dad's place was running running around $10,000 per acre with a 10 acre minimum due to zoning.

Leonard

 

[flying belgian]

I'm going to go against the grain on this one. If You have the money to write him out a check I think it is as good an investment as any but if you have to borrow the money to buy something you don't need, I'm not so sure that is wise in this unstable econemy.

 

[kyhayman]

I'm with F.B. on this, if you dont need it and it wont cash flow then its no bargain at any price. If you want to risk borrowing money on a tangible investment then you cant beat doing it now. Interest rates are low and land is one of the few investments holding its own. Plus, it has income potential. I dont know what 10 acres of crop land and 10 acres of pasture in your neck of the woods rents for or what the mobile home would bring in as rent but here either one would bring in more than enough to make the farm payment. Was it me, I'd check with the bank, then offer him 60 and not leave until it was mine, even if I had to pay the full 80

 

[Hill-Billy Rock-Star]

It's dirt and God isn't really making much more of it. So if you go off supply and demand it sounds like a good investment.

 

[Gun guru]

It depends on what your financial situation is.

Is $80K a lot of money to you? It is to me cause I am old school, and I dont spend money unless it is a return on investment kinda thing. Could you buy it then parcel it off and make money? Can you rent out the place to a family? Maybe rent the barn?

 

[TomH in PA]

Interest rates are never going to be lower than they are now. If you buy it and rent the place out it won't cost you much and you control who lives there.

 

[M Nut]

Thanks for the opinions. I thought I'd better try and move forward with the purchase, but I just needed a little reassurance. $85,000 is a lot of money no doubt, but 40 acres would be nice and I'll use 30 of it for farming in some way, just can't do much with the swamp land. I'll go talk with my banker next week.

 

[fuzz48]

Has everyone forgotten what happened back in the 1970s & 80s. The land market is over heated just as the housing market got over heated.I guess if your under forty you haven't experienced these things. An old farmers advice to me back then was never buy anything that will make you hard-up. Took his advise and bought land in mid 1980s for half price. My two cents worth!! Question can the government sustain the current programs ???

 

[Gundoctor New Haven, VT]

I would buy this right up. As for the home you will control the neighbors. Plus how about renting it out for Deer hunting as a suggestion. One week up to 4 hunters at $1000 a week. That will help with the payments and you have the say on who is there.

David Pidgeon
New Haven, VT

 

[GordoSD]

If you don't buy it, someone else will. That "someone" is most likely to be the neighbor from hill! I didn't buy the adjoining 50 acres to my place in 2000 for 50K. Owner split it into two 25's and they recently sold for 70k each! And now I have two neighbors that are a PIA and poach my deer.

Gordo

 

[Mike (WA)]

85 grand for 40 acres and a usable residence is hardly a "bubble"- more like what shakes out after the bubble bursts!

The place will cash flow just on renting the house- its a no brainer- buy it!

 

[NY 986]

I'm kind of thinking the same thing. Some guy in Jersey or Eastern Mass. can cash out a ranch home and few acres out for 3/4 of a million (having a much lower basis in the property) and move someplace else and all of a sudden they are king of their new neighborhood. I have already heard from a number of people that gimmick is losing steam. I think people should heed the banks and value real estate on more of a historic basis than the highs of the past few years.
If you go ahead make sure it cash flows easily if times get tough.

 

[aFORDable]

Bought our first farm in 1977 @ $1000 an acre. Have steadly watched land prices increase since then and now $4000 an acre is common. Land that joins you is worth more to you than anyone else. I've bought 5 parcels of land that join our place over the years, the most recent being this year, and have never regretted it. However, you must always see a way and have a plan on paying for it that doesn't put your family in a bind that's painful.

 

[Anonymous-0]

Just reading your post I dont see that your have any great plans for it other than to "control" who lives there. I have looked at and passed on or bought my share of property. If your a pretty young guy it probably works out as this kind of deal needs a lot of time. The idea of buying to control the neighborhood is a little weak, I made an offer on a small adjoining property 3 yrs ago, didnt get it and looking back am glad I didnt, thats just not good enough for the time it takes.