Author Topic: Buy fathers land? its speculative.  (Read 760 times)

DaKini

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Buy fathers land? its speculative.
« on: October 07, 2018, 01:31:38 PM »
Hi, my dad wants to sell a small patch of land, currently designated as garden (looks more like dumpyard, ie old wood shacks and high grass there, no gardening equipment whatsoever). I did not yet investigated prices but its a propspering rural village which expands slowly but steady. He asks about 15k EUR for what i guess a 100x50 meter, where roughly 2/3 is a hill slope.

The interesting part is, that this is located about 200m from the village, between the connecting land road and the vilage. It may some time become alowed to be built on (currently only argicultural use is permitted), which will raise its value significantly. The hook is, we talk about a timeframe 10yrs-> never.

So the question is, is it a good speculation?
In my eyes i better leave the 15k in money producing assets instead of investing it in a insecure gamble. Especially since i have no idea what else i could use the land for, i am about 20 minutes car travel away from it.

What is your opinion on this?


Edit: we are talking about southern germany here, and i have no emotional investment there currently.
« Last Edit: October 07, 2018, 01:34:49 PM by DaKini »

Andy R

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Re: Buy fathers land? its speculative.
« Reply #1 on: October 07, 2018, 07:13:08 PM »
Value is driven by demand vs supply
Firstly it's rural so is there something super special about it to drive demand out in the middle of nowhere?
Secondly if you can not build, how can you add value?

If I was going to invest in property, it would be located in a major city due to the high ongoing demand, and have an ability to add value. It looks like it has neither of these things?

DaKini

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Re: Buy fathers land? its speculative.
« Reply #2 on: October 08, 2018, 01:43:49 AM »
No, in my opinion it has neither.
The only thing is, it may become valuable in the future, and "land cannot be made more".

My back of the envelope calculation shows the following opportunity cost:
- 10yrs @ 5%: 8k €
- 20yrs @ 5%: 21k €
- 30yrs @ 5%: 40k €

If it really would become buildable, value may go easily into 500k but probably more. Current
Rate in the overall region varies between 300 and 500 per meter.
« Last Edit: October 08, 2018, 02:05:01 AM by DaKini »

Andy R

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Re: Buy fathers land? its speculative.
« Reply #3 on: October 08, 2018, 02:41:07 AM »
"land cannot be made more".

This only has meaning if demand is higher than supply, and that is not the case in rural areas. There is an abundance of land that the govt can expand out to allow people to build on. This phrase is for locations near large employment centers (major cities), and right near the water (but generally also not far from a major the city) where all the land for up to an hour or two from a major employment centre is packed in and apartments built to fit more people nearby and there is no more land near by. I don't think this applies to rural towns as far as I understand (?)

My back of the envelope calculation shows the following opportunity cost:
- 10yrs @ 5%: 8k
- 20yrs @ 5%: 21k
- 30yrs @ 5%: 40k

If it really would become buildable, value may go easily into 500k but probably more. Current
Rate in the overall region varies between 300 and 500 per meter.

Is the 5% based on any reason?

If it is right near by a large city where prices are higher and it just will take a zoning change, then there might be some opportunity. If it is not near enough (eg 30km away when the current town is already only 20km in diameter) or not a large city, I am not sure I see the point(?).

DaKini

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Re: Buy fathers land? its speculative.
« Reply #4 on: October 08, 2018, 02:57:51 AM »
The next town is about 5km away, and munich is 50km nirth.
The special thing here is, its near the alps and all rich guys love to have a house neaf the alps, so demand is definitely here. Prices have been rising constantly in the whole region, and this is not inly since the boom.

It is not rural in the meaning of "no one wants to live here". One probkem here is in fact, prices are so high already, normal familys cannot afford to buy and build already. This is one of the most expensive areas of germany, only topped by the major cities.

bwall

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Re: Buy fathers land? its speculative.
« Reply #5 on: October 08, 2018, 11:48:24 AM »
I read your post and my first thought was 'south of Munich or north of Munich'?

Real estate values are all driven by local events. Most people here don't know Germany or the Munich area very well. I lived for four years north of Munich.

If I read correctly, you've got 5000 m 2 (1/2 hectare) available 50km south of Munich for 15,000 EUR. I'd drop everything and buy it immediately. If you don't buy it, please put me in contact with your father and I'll buy it.

DaKini

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Re: Buy fathers land? its speculative.
« Reply #6 on: October 09, 2018, 07:15:23 AM »
You realize, its farmland, not buildable space?

Edit: quick google analytics showed its 0, 19ha land (half of it hillside), and given the upper bavarian average of 89k/ha shows this would be cheap (worth about 17k , without considering the gilden south of munich bonus).

Currently we hope he keeps it.
« Last Edit: October 09, 2018, 07:31:48 AM by DaKini »

bwall

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Re: Buy fathers land? its speculative.
« Reply #7 on: October 09, 2018, 09:44:34 AM »
You realize, its farmland, not buildable space?

Edit: quick google analytics showed its 0, 19ha land (half of it hillside), and given the upper bavarian average of 89k/ha shows this would be cheap (worth about 17k , without considering the gilden south of munich bonus).

Currently we hope he keeps it.

Yes, you mentioned in an earlier post that it was zoned for agriculture, and 5 km. outside the nearest village. And, since you're south of Munich, it's not a surprise that it's sloped, that is where the Alps start!

But, at 0.20 hectare, I'd have to revise my previous statement where I offered to buy it. It's probably still a good deal, but not for me. :)


Retire-Canada

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Re: Buy fathers land? its speculative.
« Reply #8 on: October 10, 2018, 09:22:34 AM »
In my eyes i better leave the 15k in money producing assets instead of investing it in a insecure gamble.

I would agree.

simonsez

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Re: Buy fathers land? its speculative.
« Reply #9 on: October 10, 2018, 12:23:50 PM »
I don't have any advice but how's the access/road?  Is the connecting road graded and paved?  Does it drain well or is there often standing water the day after rain?

It sounds like you are a 'No' but at what price would you be a 'Yes'?  If you are a for sure 'No' at 15k but would be 'Yes' at 10k, talk to your dad.