Suggestions on what do do with a piece of land?

[Vilx-]

I've got a piece of land that I'm paying mortgage for (don't ask me how it came to this). It was bought before the global financial crisis of 2008, so the real estate prices have plummeted since then. If I was to sell it now, it would only pay for about half of the remaining debt. If I remember correctly, it's about 1200m² (1300 sq ft), meant for building a house on it, in a suburb(?) area (where everybody builds houses). I do not have the means to build a house on it at the moment, nor do I expect to have them for years to come. And even then it's still an open question whether I want to live there at all.

In the meantime it's just standing there empty and accumulating grass. Which is quite frustrating. Is there any way I could make that plot of land to generate at least some income? I cannot think of anything, because all the ideas that I get require substantial investments that I just don't have.

[Kazimieras]

Depending on zoning laws in the city you may be able to rent it out for a local farmer's market (assuming the rest of the area is well developed). Alternatively if you are nearby, maybe use it for some farming, so even if it is costing you, it is earning its keep by keeping food costs down, etc.

I hate to suggest it, but it may just be worth selling it and taking the loss (assuming your current cash flow can allow for it). Do the math on how much it costs to carry the land (taxes, maintenance, etc.) and I suspect you'll find you will be a long time before you're above water on it. It's better to cut your losses in such a situation and see about writing the loss off against another financial gain (ask a local tax professional)

[Posthumane]

A former co-worker of mine started an RV storage business on his land. He initially created it just to have a "business" of some sort on his land as he anticipated being bought out for a local highway expansion, but it turned out to be a good source of supplementary income. He was charging something like $12/mo per RV and could fit close to 100 vehicles on his lot with a good layout. At those prices the place sold out almost immediately and he had a 1200/mo income from very little work and almost no investment save for some security upgrades. I don't know what the RV/trailer/boat storage market is like in your area, but it's something to consider for a bare plot with road access.

[Vilx-]

Thank you for your ideas! I'm afraid I had not provided enough information though. :( Here are my thoughts on them:

Selling and cutting losses: That would be dispiriting. I paid all this money and still don't have anything to show for it. Better then to wait until real estate prices are up again, even if it does take 10 more years. In the long term, I can still come out on top.

"Rent it out for a local farmer's market" - do you mean to set up a marketplace for farmers? I don't think there are many farmers nearby. It's just houses all around. Which also means that people in them are away for the most part of the day, so there wouldn't be many customers, not during the civilized hours of the day.

Farm it myself - I see quite a few problems with that:

• The plot is quite small. I cannot grow much stuff there, so it should be valuable stuff that will last for a long time.
• However I do not have any good storage available. No cold cellars or large freezers. Even if I did buy a large freezer (no idea where I would put it in my already cramped apartment), how long would it take for the freezer alone to have paid back?
• Also, the place is about 20km from where I currently live. That means that a single trip there-and-back again would cost around $7 in gas. Farming something would need lots of attention, so lots of trips.
• Plus, I live in Latvia, so summers aren't extremely long. This sets a cap on how much can be grown (no double harvests here) and it also means that we like to spend what free time we have in the summer for doing, well, summer activities and relaxation. Weekends are as a rule spent in the remote summer house, and workday evenings aren't much available either (we work full time, so there's just not enough time).

Now, maybe there is something that can be grown which doesn't require much attention, but then I still need to find that thing. :P

Rent it as a vehicle storage: I've thought about that myself, but the question is - to whom? Since everybody in the area lives in their own little house, they also as a rule have either a garage or some sort of shed for their cars. For my storage to be better than keeping the car right next to their own houses, it would need to have some really serious advantage. I can only think of security, which again costs a lot of money.

Storing exclusively recreation vehicles - dunno, maybe, but I haven't seen many of those around. I would think that people who can afford such things can also afford a house, so they'll just keep it in their own garage anyway.

Anyways... any more ideas? :)

Oh, and btw - I forgot to say that the plot of land also has access to electricity, which is a bonus.

[Kazimieras]

That is a bit further away than I was originally thinking :) Nice country that I hope to visit someday (I am visiting Lithuania later this summer) and now back to the question at hand...

I don't know the taxation system for land in your area (my area taxes all lands for the value of the land + property on the annual basis), and for me this would be the biggest reason to ditch it. Don't keep an asset around that you can't use that is costing money.

So a farmer's market could be something that only happens on Saturdays. Some local shops and farmers come to the location and open up stalls for the day. They can be fun and are quite popular around here. The products typically sold tend to be more of the 'free range and organic' variety, so they come with a bigger price tag, which is nice for the sellers.

If you were further south solar panels may have worked, but I suspect you won't be able to generate enough power to make it worth it. If you intend on keeping this plot long-term an orchard on it may work, but that is 20 years before it will start to generate an income. Walnuts, cherries, apples, etc. are some possible tree options. You could have one of the nearby houses lease the land from you for a cost, this can sometimes work if people are short on space and the property has neighbours. Depending on how many people are nearby, would they want a new service such as a private tennis court? It does mean starting up a new business, etc., but it may be an option.

Just want to circle back to this though:

Selling and cutting losses: That would be dispiriting. I paid all this money and still don't have anything to show for it. Better then to wait until real estate prices are up again, even if it does take 10 more years. In the long term, I can still come out on top.

I just want to have you do the math on the land. It may be dispiriting, but figure out how much land prices would need to increase in order for you to break even (don't forget to work in inflation and expenses). If the real estate market has dipped, do you think it is a correction or was it a crash? A crash you can recover from, a correction means things are as they should be and you are relying on regular land appreciation to occur. If that is the case, what do you think you could earn if you sold it now and invested the money. It may be more cost effective to simply sell it rather than sounding like a person at a casino going "next game I'll win it back". Before you sell it, if you go that route, talk/read up how taxes on a loss works. You may be able to deduct it from something else making it not as bad.

[Vilx-]

Solar panels/wind - yeah, forget it. Doesn't work in my country. Plus - huge investment upfront. Same about things that take 20 years to start paying back. As for farmers markets - I googled around a bit, and it seems that the tradition is to offer the space for free. So even if I did it, I couldn't make any money directly off of it.

The tax comes once a year and it's not very big (I think it was around $60). I tried doing the math, but it's hard to make sense of the real estate prices. For one, I've no idea whether it's a readjustment or crash. More likely the former though, but it's just my gut feeling (which means nothing, since I don't know anything about the real estate market). Secondly, the prices for plots in the general area vary wildly (from $16/m² to $50/m²), and I still can't figure out why. If I could get it to sell for $28/m², I could come out even, but I've no idea whether that's possible. Worth a try though, I suppose.

But that's an interesting idea - selling it and putting the money into a savings account. I'm not sure if the bank would allow that though. A savings account generates about 4-5%/year interest rate, while the mortgage is below 2%/year. Which means that the savings account would probably balance out the interest rate of the mortgage and a bit more, shortening the overall repayment period. Something to keep in mind, I guess (provided that this isn't a tabu for all the banks out there, which I can very well imagine being so).

P.S. Yes, Latvia is a nice country. Come visit sometime! :)

[arebelspy]

But that's an interesting idea - selling it and putting the money into a savings account. I'm not sure if the bank would allow that though. A savings account generates about 4-5%/year interest rate, while the mortgage is below 2%/year. Which means that the savings account would probably balance out the interest rate of the mortgage and a bit more, shortening the overall repayment period. Something to keep in mind, I guess (provided that this isn't a tabu for all the banks out there, which I can very well imagine being so).

The lien would have to be paid off when sold, buyer will want a clear title, and bank will have a due on sale clause, or something similar, unless the buyer is assuming the loan.

You can't just sell, keep the money, and not pay off the loan yet.  ;)

[Posthumane]

People in my area (Canada) almost all have houses with driveways and garages, yet many of them still pay to have things like RVs, trailers, boats, etc. stored off their property, so it might still be worth considering. Offer it up cheap and you may get some bites. You may not make a boatload of money from it, but it would help offset any costs associated with it. If you had some money to invest into it you could add a fence and some lighting, maybe some motion cameras for security.

Another option, since it's in a suburban area, is to lease out plots for people to use as gardens. I've never been to Latvia, but in Poland it is very popular for people to have small garden plots which are often separate from their houses/apartments. You could divide your land into several plots for families to use with a small annual fee. Of course this depends on the soil quality there.

[Vilx-]

Selling & investing - OK, I thought so. :)

RV storage - well, maybe... as I said, I haven't seen many trailers and boats around here.

Leasing as gardens - garden plots used to be popular for people living in apartment blocks, but lately I think that the trend has diminished. I've seen a lot of abandoned garden plots in the last decade. Still, there do seem to be some ads about it. I'll have to think about it. Thanks for the idea!