Author Topic: First Lot purchase - $4250  (Read 3660 times)

FrugalFisherman10

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First Lot purchase - $4250
« on: September 30, 2014, 09:45:21 AM »
First off, I'm honestly a little scared even putting this on here because you people think so much differently about investments from most. But your feedback is what I need to hear so let me have it. (This thing is a steal. No doubt about it.)
Brief info:
Neighborhood and golf resort/lake community located in middle Georgia that is seen as one of the premier golf destinations in the state, and in the nation as a whole.
Iím interested in buying a lot because I can get one for $4200 and I want to flip it.
Similar lot (i.e. 3 doors down) for sale for $31,500. Iíd like to sell this one for something in the $21-24k range.
Lots in the ďother partĒ of the neighborhood, the really nice-lakefront-fancy part, are for sale for $550,000.

The Catch: In purchasing a lot, I will have to pay monthly membership dues amounting to about $200. Doesnít seem like much, but still. I donít have to pay for the golf club membership which is expensive.
More juicy stuff:
My sister and her husband and their kids just bought the lot next door to the one Iím wanting to buy. They bought it for $4200 this week. So one lot on the street is for sale for $31,500, the other was just bought for $4200, and the one Iím looking to buy is $4250. These cheap lots are owned by the same guy, and he is tired of holding them and just wants to be done with them. (Biggest question: What makes me think Iíll do any better? Biggest answer: My sister and her husband have lived in this neighborhood for a few years now renting. They are teachers at the local schools. They know the area. They think that the neighborhood is about to become even more desirable in the near future because of the schooling situation near there, and another one of these nice neighborhoods in the area is filling up and running out of space.)
I donít like the idea of holding this piece of property and shelling out $200 every month I otherwise would be saving just to speculate in this market, but it seems like the only way this can go is up! On the one hand it seems like such an easy deal, on the other it sounds like something that could put a decent dent in my tiny and brand new growing stashe if it goes south. Ultimately this type of thing isnít gonna kill me so I donít want to make a huge deal out of it, but I donít want to put myself in a stupid spot for no reason.

This place is just a really cool place to live (although thatís not what I want it for). It has a little park/grassy area in front of it with a couple gazebos and sitting areas and the neighborhood kids just run around out there like crazy. Itís secluded. Thereís tons of ponds in the neighborhood, and in paying those fees you get to use the 2 pool areas as well.
Sidenote but probably not a big deal: This is middle-south Georgia and my sister just happened to mention today on the phone that there was a little black girl playing in her kitchen right then with her kids because her family had just moved in to one of the houses on the street. Not a big deal right? I hope not. This was literally just mentioned by happenstance...my sister didn't mean anything of it. But knowing the area I'm concerned about "white-flight" turning their little section of the neighborhood into a less desirable area and me standing there with a cheap lot that's costing me money each month. I hate it that this is still a thing, but it is, especially in the south... and it would have no effect on me as a buyer otherwise, but you have to be aware of the market pressures like that I guess

Market Value: ??? Who knows. I feel like I could get somewhere above $10k for it in the next year, or even $25-30k given that there's another lot for sale for that on their street.
Original Purchase price: 4250
Original Mortgage Amount: 3000?
Interest Rate: Not sure yet because I haven't asked the lender. Is it silly to even get a loan for this amount? I can't just buy it outright because I don't have a lot of money right now. I've got my emergency fund, plus the amount I was about to use to pay off the rest of my student loan ($2500), plus a little bit more for some of the goals I've been saving for. In the next couple of months I could just try to save enough up for it.
Mortgage Term: I could just do some long mortgage term and pay a tiny amount each month so that it doesn't affect my budgeting that much, or I could just try to buy the thing as fast as I can. This will depend on the loan terms/options when I hear back about that.
Term remaining:
Amount remaining on mortgage:
Gross Rents: N/A
Principal and Interest (the P&I of your PITI - should match with the above info):
Taxes and Insurance (the T&I of your PITI):
HOA costs: ~$200 per month
Deferred maintenance notes:
Anything else special or unique in regards to the numbers of the property (not the property itself; things such as city assessments, back taxes, special costs due to unique features of the property, etc. etc.): There's lots of restrictions on the type of house you can build on the property, (must be at least 1450 sq ft of heated area)

Cheddar Stacker

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Re: First Lot purchase - $4250
« Reply #1 on: September 30, 2014, 09:51:33 AM »
Small purchase price + $200/month is not really that big of a risk. But, if you don't have the cash for this type of speculation that tells me it's not worth the risk to you specifically. If you had $10K cash you were planning to invest I would say go for it.

thedayisbrave

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Re: First Lot purchase - $4250
« Reply #2 on: October 01, 2014, 08:25:45 PM »
You don't even have $4,250 cash.
You would have to raid your EF & money ear-marked for SL repayment in order to "afford" this lot.
You are speculating by relying on appreciation.

I'm not a mortgage lender but I've never heard of someone getting a $3,000 loan.  Seriously? It doesn't seem worth it.  You would want to finance it over a long-term... you mean 30 years? You might just get laughed out of the office.

Quit being tempted by the siren song of speculation.  PAY OFF YOUR STUDENT LOANS.  DON'T RAID YOUR EMERGENCY FUND.

If you had $5K+ set aside already just waiting to be invested, I'd say you have wiggle room to take a chance.  But in your situation? Hell no.

Sorry Charlie.  I'm not great at sugar-coating.

FrugalFisherman10

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Re: First Lot purchase - $4250
« Reply #3 on: October 01, 2014, 09:14:57 PM »
True
I've decided to let it pass by. If it is available somehow still in the future, and I've actually got the money, then maybe I'll do it.

Going to send in the "payoff amount" on my Student loan - boom

Thanks for the responses and thoughts

olivia

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Re: First Lot purchase - $4250
« Reply #4 on: October 01, 2014, 09:15:35 PM »
What have lots recently sold for in the neighborhood?  That's nice that one down the street is listed for $31k, but what have lots actually sold for?

Does the lot itself have gazebos in front of it with kids running around?  Because that sounds like my personal nightmare, so if that's in front of the lot I wouldn't consider it a selling point.  If it's an area in the neighborhood away from the lot, that's a different story.

There is no way you could get a mortgage for that amount.  Maybe a personal loan, though-I would check with your bank. 

FrugalFisherman10

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Re: First Lot purchase - $4250
« Reply #5 on: October 02, 2014, 10:58:18 AM »
Realistically, no other lots have sold recently in that particular section of the neighborhood. Not according to trulia. I didn't check zillow or other websites before posting this. In the "other" part of the neighborhood, a lot on the lake sold for $499,000 in March...here comes a McMansion I'm sure.

And yes, right across the street from the lot I was talking about buying is this little grassy area/park. It has two gazebos and some sitting areas and the neighborhood kids play out there. Sounds alot like MMM's situation in one of his posts about one of his houses where he has a little mini park like this outside.

Like I said, I'm letting it pass by, and I did just submit my last payment for those student loans :)

Cheddar Stacker

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Re: First Lot purchase - $4250
« Reply #6 on: October 02, 2014, 11:06:54 AM »
Like I said, I'm letting it pass by, and I did just submit my last payment for those student loans :)

Congrats on finishing the loans. Time to start the investment train. Maybe the lot will still be there in a year when you're ready.

rocksinmyhead

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Re: First Lot purchase - $4250
« Reply #7 on: October 02, 2014, 11:07:35 AM »
Like I said, I'm letting it pass by, and I did just submit my last payment for those student loans :)

congrats! I know how good that feels!! :)

Cheddar Stacker

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Re: First Lot purchase - $4250
« Reply #8 on: October 02, 2014, 11:12:03 AM »
Like I said, I'm letting it pass by, and I did just submit my last payment for those student loans :)

congrats! I know how good that feels!! :)

Congrats to you too rocks! I don't know that feeling since I haven't don't it yet. Sigh.

But I do know how good it feels to have more than enough invested to be able to pay off all my debts at the drop of a hat. That feels good as well. Maybe some day I'll actually do it, but for now I'm keeping my debts.

FrugalFisherman10

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Re: First Lot purchase - $4250
« Reply #9 on: October 02, 2014, 09:02:15 PM »
Thanks guys (gals, whoever you are)! feels pretty good