The Money Mustache Community
Learning, Sharing, and Teaching => Real Estate and Landlording => Topic started by: akajoe87 on July 11, 2013, 08:17:10 PM
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I bought a lot about 2 years ago in this development for $38,000 and built my house on it. Recently a lot was offered to me for $20,000 because the subdivision was reposed by the bank.It is in a small town and things are selling slow. I was wondering if now is a good time to buy it but I would have to take a loan out for $20,000 in tack it on my mortgage and eventually sell my house and then build a house on that lot. The HOA fees are a hefty $300 a month. Should I buy it or not? Thanks
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Low balling on the price may be in my best interest. I really want the lot and feel that if I do not buy it now I may never get the chance to purchase it for that price again while interest rates on loans a very good. I build my own houses and if this works out I will be debt free if I can sell my current house and build on that lot.
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Why is the first house you build not good enough? That is, why do you want this lot?
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Wait, the HOA fees on an empty lot are 300$ a month? What do those fees get you exactly?
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To make a judgement, we'd have to know more about your plan.
What's of paramount importance is that you not use the $38k you paid for your lot as an anchoring point for the second lot. That is, $20k isn't necessarily cheap just because it's lower than what you paid. You need to do a thorough comparison to other lots not only in your town, but neighboring towns. Be sure to factor in the HOA fee, realizing that a $300/mo annuity is worth on the order of $70k. So you'd be much better off paying $60k for a lot with, say, a $300/yr HOA fee. In fact, with a $300/mo fee, it's entirely possible that someone should PAY YOU to take the land off their hands.
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The HOA fees really only get a paved road! Thanks everyone for your help. I am not going to buy it until I can get it for 10K or the market picks up around my area.