Author Topic: Hacks for Buying Land  (Read 1338 times)

trailcamaddict

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Hacks for Buying Land
« on: November 13, 2017, 08:28:40 AM »
I see a lot of information about buying real estate for income (duplexes, apartments etc.).  However, I am more interested in buying recreational property 40+ acres of wooded/ag.  I have no need for income from the property (but would take ideas for that too).  Rather, I would like to be able to have my own property to enjoy during my early retirement.  I believe it can also provide my kids with great experiences in the outdoors. 

I would like to know if there are any tactics that have allowed for purchases of land much cheaper than market prices.  Also how can I avoid the high taxes (WI) but keep it private.  I see a lot of people putting land under LLC designations but not sure why??

Please let me know your ideas. - Thank you!

ChpBstrd

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Re: Hacks for Buying Land
« Reply #1 on: November 13, 2017, 08:05:52 PM »
My grandpa picked up some rural land at delinquent tax auctions decades ago.

However, do your diligence. One 40 acre parcel he bought had been almost completely absorbed by a large meandering river since it was plotted - and he discovered his land was under water after buying the parcel! Another was surrounded by fields with no road, no easement, and no way to access it. In hindsight, the family would have been a lot better off had he invested in stocks instead of these "bargains". No matter how cheap they were, they consumed cash, continue to consume cash through property taxes, aren't particularly useful, and are apparently not even worth selling.

What sort of recreation do you have in mind that requires a land purchase rather than using national forests, state parks, etc? How  many years would you and the kids use it? I know that hunting, hiking, bicycling, etc. can be done in national forests for free, so maybe you're thinking off-road motorsports or firearms sports? Increasingly, we're seeing parks/forest space devoted to even these activities, or at least permitting them. Spend some time questioning park rangers, etc.

Another option is to go into a property as tenants in common with friends. Benefits include paying only a fraction of the full costs for a bigger piece of land than you could otherwise afford. The main drawback is that your friends will eventually do things that annoy you, like leaving trash, building shitty cabins, storing junk, being there all the time, cutting trees, etc. They might also fail to pay their share of taxes. You'll probably want a corporation or operating agreement for such an arrangement - one that keeps in mind that they might sell their share someday. My 160 acre hunting club is arranged this way, and it has been cash-flow neutral for about 80 years.

And before you buy, consider leasing property. If you were going to drop, for example, $40k on a 20 acre patch of dirt, consider that you could invest that amount at 5% and generate $2k/year to use on a lease that might get you 40 acres! Lots of landowners would take you up on such an offer because there's lots of land that only costs money and generates nothing for the owners. In many cases, if you pay the taxes, you can use it! Note how your financial flexibility is maximized in a lease scenario. If money someday becomes tight, it's not tied up in a highly illiquid asset - you can just cancel your lease.

ChpBstrd

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Re: Hacks for Buying Land
« Reply #2 on: November 13, 2017, 08:10:38 PM »
Also note that the price of timber land reflects the available tree harvest. In my state, you can get clear-cut remote forest land for $1000-1500 / acre, but with mature trees that would be $3k/acre or more. If, for example, you wanted a place to shoot skeet and ride ATVs, a clear cut property might be ideal. Plus the property might appreciate as the trees grow back over 25 years.

On a related note, check with local timber companies or timber investors. They might be happy to write you a lease for a nice tract of forest. It's all about cash flow for them.

Fishindude

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Re: Hacks for Buying Land
« Reply #3 on: November 15, 2017, 06:56:46 AM »
I don't have any brilliant ideas on how to purchase land cheap other than to tell you to be ready to jump on it and buy soon as it becomes available.   If you can get the deal done before a realtor gets involved and it gets advertised you will be money ahead too.

Things you can do to generate a little income or help cover holding costs include:
* Cash rent for farming
* Sell timber
* Put in a DNR certified forest of permanent wildlife habitat program to reduce taxes
* Enroll in one of many CRP type programs to earn income


Kl285528

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Re: Hacks for Buying Land
« Reply #4 on: November 15, 2017, 07:14:53 AM »
Father in law has about a 50 acre farm that he inherited. Leases the land to a farmer for farming. This property has three streams running through it in various places. Got approached by a private company that specializes in conservation easements and stream remediation credits. If highway construction or private development reduces wetlands or impacts water quality in one location, then that developer or the state DOT has to purchase some form of credits to offset that impact. Long and short of it, my father in law will be granting an easement over about 10 acres (which is land that is stream bed or adjacent to it) that prevents him from ever developing that 10 acres, in return for an outsized payment that he would not get in 50 years of leasing it out to the farmer, and the farming can still go on undisturbed! The land is in a location where there will never be anything but farms, or rural type housing.

Mr. Green

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Re: Hacks for Buying Land
« Reply #5 on: November 16, 2017, 10:53:44 AM »
Generally speaking, there are no hacks to buy land at a significant discount. Land is a totally different beast than houses and if something is cheap, there's a reason for it. Either it has no access or has some other undesireable trait. In the rare case that something is sold at a significant discount, someone probably did a lot of work to make the deal happen. I've bought 3 pieces of land over the years, all with significant upside potential but I spent hundreds of hours researching each piece. That's not a hack, just doing your due diligence. You can also get burned pretty bad with land if you don't know what you're doing. There's zoning, access, electric, water &sewer, and myriad other aspects you have to look into to determine what can be done with a piece of land and what it is worth.

OkieM

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Re: Hacks for Buying Land
« Reply #6 on: November 19, 2017, 03:02:17 PM »
Here in Oklahoma there are plots of state land that were reserved for school money when they did the land run. They make great spots for the activities you mentioned and get leased at auctions every few years where they sometimes go cheap. It could be a great way to see how much you might use it. I imagine most states have something similar. State/national land around here is limited, especially for hunting with firearms, so it makes an inexpensive alternative.