Author Topic: I want to buy land and build a shack for a second home. Is it profitable?  (Read 1816 times)

Kaplin261

  • Bristles
  • ***
  • Posts: 319
  • Age: 38
  • Location: Richmond Va
    • Michael Foutz
So for the last decade or so I have been thinking about how I could economically buy some cheap rural land build my own tiny home for the purpose of getting away on the weekends from the hustle and bustle of my city. I would also plant fruit trees and landscape the land for one day I would retire and build a larger custom home to live in(12 years away).

With the invention of airbnb I thought maybe I could rent this retreat out and this could pay for my 2nd home. But logistically and financially the numbers never worked out so I scrapped that idea. But what if I rented my own home out on airbnb and used the cabin to vacation to when I had tenants staying at my home?

I currently live in a home that has a value of of about $360,000. It is in a great location for Airbnb rentals. I feel confident I could get $200-250 a night for my home on airbnb.

The tiny home would be under 200 sqft so I can avoid building permits. No utilities. Small solar setup for about $1,000 for lights and water pump.

I think I could pull this off for about $25,000. And if the idea flops and we (my wife) hates it I can recoup that minus a 6% realtor fee.

Initial investment of $25,000 means i'm paying $1,750 a year that I could be earning in my vanguard account. Another $500 in gas ,wear and tear for traveling. Taxs and misc another $250. Yearly cost would come out to $2,500 per year or 12-15 airbnb nights. Does not take into account land appreciates 3% per year.

Papa bear

  • Handlebar Stache
  • *****
  • Posts: 1064
  • Location: Ohio
Interested in the idea.  I don't have much in the way of advice though.  A few questions that I've thought of on the land front though:

How much land are you looking for?  Could you plant enough fruit and nut trees for "pick and pull" sales to customers?  What about renting the land out to other tiny houses/rv's/trailers. Could you lease the land for hunting? Any mineral or natural gas rights or a current well/pump?  Haying out fields for local farmers?  Any current timber value on a recurring basis?


Sent from my iPhone using Tapatalk

Kaplin261

  • Bristles
  • ***
  • Posts: 319
  • Age: 38
  • Location: Richmond Va
    • Michael Foutz
OP: "Does not take into account that land appreciates 3% per year."

Not sure what that assumption is based upon.

Undeveloped and/or rural land generally does not necessarily appreciate.* In fact, unless you develop it in some way -- putting in road access, running electricity, etc. -- undeveloped land generally is not a good investment. And even doing modest development steps can be outrageously expensive. We once tried to develop 50 acres of undeveloped land in gorgeous terrain to potentially build a future, and modest, retirement home. Here were some of the costs: (1) small bridge across a tiny creek to access the lot -- $70,000 (including federal and state permits); and (2) road up the side of the mountain -- $200,000. We declined to make those and related investments. The undeveloped land remains an anchor around our necks, and has actually declined in value over a period of a decade.

Undeveloped land also provides no returns, yet you have to pay property taxes on it. And as soon as you improve it, those property taxes go up.

Finding a buyer down the road can be a multi-year endeavor, too, if you decide or have to sell. There won't be a lot of people who share your specific rural dream on that specific piece of rural property. It can take years to sell undeveloped land.

I'll never buy undeveloped land again.

*I'm certain that there are exceptions, to include, for example, buying an empty lot on the periphery of a ski area.

Wow 50 acres! Its good to here from someone who has been down this road before.

Rural land in Virginia is appreciating at 3% at least  around Charlottesville  and Richmond.

I think your right it may be difficult selling the land at fair market value. I would try to go into this by getting the land under market value and im willing to wait a couple years for the right deal. I'm also only going to be able to get 5 acres on my budget and the location I want.

Kaplin261

  • Bristles
  • ***
  • Posts: 319
  • Age: 38
  • Location: Richmond Va
    • Michael Foutz
Yes we are! How far from interstate 64? I would love to own your 50 acres but my budget is no where close to probably what your property is worth. What is the fair market value of your property if you don't mind me asking?

Undecided

  • Handlebar Stache
  • *****
  • Posts: 1080
I think your right it may be difficult selling the land at fair market value. I would try to go into this by getting the land under market value and im willing to wait a couple years for the right deal. I'm also only going to be able to get 5 acres on my budget and the location I want.

What does "market value" mean to you? You can't reasonably sell this land at "market value," but you can reasonably buy it for "under market value"?