Florida vacant lots - Posted by Brad

Posted by vern on March 12, 2003 at 09:18:24:

I think one thing that you should consider is not only what is the ROI or expected ROI after 15 years, but what could you have done with that same 3.5K - 5K (+taxes payable). And I don’t mean the stock market! But, what other R.E investments could you have made and with that money,and at a coservative rate, where would you be. A prime example is, what if you spent that same 5K getting into a rental prop that cashflowed and was paid for in 15 - 20 years. It seems that there is little or no leverage in your raw land because it’s worth 5K and you are putting out 5K in cash. On the other hand…it’s very passive. The only thing you have to do is wait and monitor the situation…and maybe cut the grass a couple of times a year. Let me know how it goes. Maybe I’ll buy one

Florida vacant lots - Posted by Brad

Posted by Brad on March 12, 2003 at 01:36:13:

Hi All-

Does it make any sense to buy up vacant lots at dirt cheap prices, (3-5K)and hold them.

I’m looking at a very long term investment, like 15-20 years.

I know you are looking at money going out (property tax) instead of money coming in but the outlook, if you pick the right area such as the SW coast of Florida, Charlotte and Lee county, would seem to justify it.

With “Money Mag” and “Places Rated” all rating the area as growing by leaps and bounds as the baby boomers start to retire, it seems like some place that just might do well down the road if you can wait that long and pick the sweet spots.

Any one have any thoughts on that?

Cheers
BR

Re: Florida vacant lots - Posted by D

Posted by D on March 14, 2003 at 11:29:23:

I forgot to mention I pay about $8 per year on taxes for the 2 lots. D

Re: Florida vacant lots - Posted by Ronald * Starr(in No CA)

Posted by Ronald * Starr(in No CA) on March 12, 2003 at 13:20:08:

Brad–(FL)--------------

I think you have gotten some good responses already.

Try to think in terms of the three finanical benefits of owning long-terms investment properties: CAT which is C ash flow, A ppreciation, T ax benefits.

Vacant land has no cash flow and no tax benefits. The only benefit you get is the “A”–appreciation.

So, figure out some rate of appreciation that makes sense to you. Or a range of rates. Then figure out what alternative investments might do for you. And compare the vacant land investing to the alternatives. Then factor in the resources you have to put in: money, time, knowledge, etc.

I suspect when you do a thoughtful analysis you will find that most other real estate investments will be better than these vacant lots. But I could be wrong. If you do the analysis, you might consider posting here for others to consider.

Good InvestingRon Starr******

Re: Florida vacant lots - Posted by RichV(FL)

Posted by RichV(FL) on March 12, 2003 at 12:22:41:

Brad,

I live in the SW Florida area. And yes there is alot of vacant land. The stuff by the water is very expensive and getting picked up pretty quick…and for a pretty penny. Some of the land a bit inland is cheap.

This is my take on vacant land…

There is no income to offset any of the expenses. You’ll have to pay Real estate taxes, maintenance costs, liability insurance, and you have $0 income off the property.

Also you may have other maintenance costs like litter or illegal dumping. You would have to clean that up to conform with county codes. Not to mention ever changing enviormental regulations.

On the upside of vacant land is tracts of land could be subdivided into lots and sold off. Tracts can also be developed (built on). Or sold to a developer.

But again…it costs you $$ to hold that land.

Just my 2 cents…

Good luck,
RichV(FL)

Re: Florida vacant lots - Posted by D

Posted by D on March 12, 2003 at 11:35:44:

Hi Brad, I actually have 2 lots between Orlando and Cape Canaveral in a little town called Bithlo. My great grandmother bought them when she lived in Ohio without even seeing them from a traveling group of “investors/developers” who would take large tracs all over Florida and carve them up into small lots and sell them as retirement or vacation property. In her case at that time it was all pretty much a scam. My uncle tried to find the lots in 1963 but everything was a marsh. I`m told now things have been drained in that area and people are putting mobiles up in the areas where the roads were actually in place.

I met a guy when I lived in CA. who bought a lot out in the middle of Colorado somewhere from a company that is doing the exact same thing, the land is worthless. People buy to say they own property I guess. I would hope the lots your looking at were at least created years ago and the surrounding area is catching up.

I have a friend whos daughter lives in Port Charlotte and she and her husband bought a beautiful 2 acre lot with a pond for $17k and are building a home, she says there are inexpensive lots there. Why couldnt you try and tie a few up with 0 down and maybe put your money on septic and power and rent the lot to someone with a mobile? Better yet, find a deal on a mobile, set it up and sell the mobile on your lot. You need to get the lots bringing something in, anything. A existing lot that is already zoned and in place without any current enviromental issues would be a good bet and you shouldnt have any problems, the only problem you may have down the road is if the county or state decide they need your lot for some type of project they have, a check into the future growth boundry at planning may help. I believe you are absolutley right about the baby-boomers. Id tie anything up you could get your hands on but I`d make them pay for themselves. Just my .02 cents D

Re: Florida vacant lots - Posted by David Krulac

Posted by David Krulac on March 12, 2003 at 09:34:13:

this is a long shot and for such an extended perior of time UNFORSEEN bad things can happen.

Envionmental issues and stricter regulations could make these lots unbuildable in 15 years. In one FL. area to discourage sprawl and further developement, you need 2 adjoining lots in order to build on one and agree to permanently leave the other vacant.

Utilites particularily water and sewer could be issues. Laws and regulations could be enacted that limit expansion of sewerage treatment plants, extension of utility line, and make septics more restrictive.

The bottom line is that you, me, and everybody else can’t predict the future 15 years down the road. Bad things happen. If you accept the unpredicatable risk, that’s your decision.

David Krulac
Central Pennsylvania