Buying Land? Here’s What You Should Know!

The dream home you and your family envision moving into might not exist. If that’s your dilemma, you have the option of having your house built from scratch. After you have an idea of what you want your new home to look like, you’ll need to work on securing the land that you want your house to stand on. Here’s what you need to know about buying land to build a house.

What to Do Before You Purchase Land

If you’ve decided to buy land, keep in mind that it’s not going to be a short-term project. Buying land is a major undertaking and to begin the process, you’ll need to figure out how much breathing room you’ll have in your budget for a new house.

Some of the costs you’ll have to account for include fees, permits, the cost of purchasing the land you need, the cost of building your house and the cost of having to make adjustments to the land in order to have access to running water and other utilities (if that’s not already in place for the land).

Choosing the Right Land

Once you have a budget in place, you can start your search for a plot of land. A quick internet search can show you where land is available in your region.

Confused about what to look for when buying land to build on? You’ll need to find an area where zoning laws won’t keep you from buying land for the investment property or home you want to build. Zoning rules set restrictions concerning things like the size of buildings and the kinds of businesses or residences that can be built.

It’s also a good idea to make sure that the land’s soil doesn’t prevent you from building, digging a well or getting electricity and natural gas. Will the land’s elevation be an obstacle? Are there any liens on the land or environmental problems that need solving? These are some examples of the types of questions you’ll need to answer before you can prepare to buy land.

While it’s possible to buy a house or a plot of land without the help of a real estate agent or broker, it can help to have someone on your side who specializes in working with vacant lots. A real estate professional can hold your hand through the entire process and help minimize hiccups. If you’re opposed to using an agent, it’s important to find a real estate attorney who can address your legal concerns.

Ready to get to purchasing land for investment purposes? Contact the expert team at Asset Quest today!

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Land As A Quality Investment

Discussions of real property investment normally focus on single-family homes, multiple-family dwellings and commercial properties. Land rarely enters into the conversation, even though can often bring higher returns. Anyone can buy land, but there is far less competition than trying to land a stock or other investment that other people are vying over. And since real estate investors tend to sway towards apartments and homes that they can rent, you’ll be stuck in fewer bidding wars and will be able to negotiate on price.

Investing In Land

Why choose land over classic real estate investments? There are many practical reasons.

Land is usually low-maintenance. You rarely have a tenant, which means you won’t be receiving midnight calls on a Saturday night because of a broken toilet. You also won’t have the aggravation of trying to evict the seemingly-nice couple who refuse to pay rent and have trashed your property. In most cases, you’ll rarely (if ever) have to even visit your property.

The second consideration when investing in land is financing. Getting a loan for any real estate investment can be difficult these days, as financial institutions’ easy money policies died with the recession of the late 2000s. Although it is often more difficult to obtain financing for land investments than it is for a primary residence that’s actually a good thing, because it has made seller financing the standard in land sales.

Seller financing is a boon for investors because terms are highly negotiable. Unlike a bank, a seller is likely to consider you a qualified buyer as long as you can prove you have sufficient funds to make the down payment and at least a few monthly installments. They’re often this lenient because they’re motivated to move the property. They’d certainly prefer to receive a lump sum payment, but most are happy just to establish a cash flow if they can’t negotiate payment in full.

Property taxes are another advantage to purchasing vacant land. You’ll only be paying tax on the land itself and not on structures, so your total yearly bill will be substantially lower. Taxes on large parcels can still be a drain, however, so be sure to take property taxes into account when evaluating land as an investment.

Know that you know some of the advantages are you ready to get investing? If so, give Asset Quest a call today.

How To Know If Raw Land Investing Is Right For You

Raw land investing has become increasingly popular among real estate investors over the last decade. Raw land (i.e. vacant or undeveloped land) is a great way to earn and maintain steady cash flow, but it isn’t necessarily the perfect option for every type of investor.

Real estate entrepreneurs come in all different shapes and sizes, and with all different goals and aspirations; however, there is one common trait they all share: the desire to be their own bosses and rid themselves from the confinements of their nine to five jobs. Because there is such variety among the real investing crowd, it makes sense that not every investment opportunity will benefit every investor in the same way. Rehabbing properties might work well for one investor while another, equally successful, investor might have better luck with buy and holds. Does this make either investor better than the other? No. Quite the opposite, in fact. Because each investor knows how to play to his or her strengths, they both excel in their individual niches.

So, will raw land investing be your new niche? Consider the following four items before making that decision:

To Attempt Raw Land Investing Or Not To Attempt Raw Land Investing, That Is The Question

It is fairly safe to say that when Shakespeare wrote his famous lines for Hamlet, “to be or not to be, that is the question”, Hamlet was contemplating whether or not to take a stab at raw land investing. Determining your niche as a real estate entrepreneur is, after all, a pretty life altering question to ask.

All jokes aside, deciding which path to take in the world of real estate investing is something every investor should put a lot of thought into. It is important to ask yourself the right questions and do the proper research before jumping into a particular niche so that you set yourself up for success. The ability to designate yourself as “man (or woman) in charge of your own destiny” and call your own shots sounds pretty enticing, which is why most people want to start a career in real estate investing; however, if you want to run a stable, profit-producing business, it is crucial to not jump in the deep end of investing too fast.

This is where raw land investing comes to play. If you are a person who is just getting their feet wet in the real estate investing pool – or even if you’ve been running your own successful investment business for years – making a raw land investment is a great place to start or expand your business. If you like property that is relatively inexpensive, low maintenance, and can produce significant cash flow, undeveloped real estate is about to become your new best friend.

The great thing about investing in raw land is that there is virtually no competition, which is perfect for those whose negotiation skills aren’t quite up to par. Most real estate investors get so caught up with rehabbing, wholesaling, and rental properties, that they fail to see where another great opportunity lies: raw land. Land is a limited resource, so those who own a piece of it are considered to be highly valuable, especially as raw land becomes more and more scarce. It can be purchased for fairly cheap, and once you own some, there isn’t much you have to do. The beauty of land is that it acts as the ultimate buy and hold. There are so many ways to make money off of raw land as well. You can rent your land out to farmers or hunters, you can develop it, or you can simply let it appreciate and sell it down the road as land becomes even more limited.

Okay, so now that I’ve got you intrigued, it is time to analyze yourself so that you can decide whether or not raw land investing is right for you.

  • Can You Manage Risk? Although raw land investing tends to be predictable, as with any type of investment, there is always some risk involved. If you are the type of person who is easily overwhelmed by the unknown or conversely, you are someone who jumps into things hastily, raw land investing is not a niche you should pursue. When you invest in a plot of land, you are essentially predicting the future. The moment you put money down on the table, you are saying, I believe that what I am buying into will increase in value overtime. While, in theory, you are probably right – land is limited and the human race will always need more space to develop – there are some things that are out of your control. Suppose a natural disaster strikes and your land gets flooded. Perhaps a fire ensues and burns the crops of the farmer you are renting to and he or she decides to stop paying you. Although these are rare scenarios, they are not impossible and therefore, as an investor, you must prepare yourself for the worst. On the other hand, if you are an adrenaline junky who is drawn to risk like a moth to a flame, it is likely you could make a investment decision based on feelings over facts.
  • Are You Financially Organized? When it comes to raw land investing, more than likely, you will not realize a profit as fast as you would if you were rehabbing or wholesaling properties. Because of this, it is crucial that you are vigilant about organizing your finances. This should not, however, deter you from undeveloped real estate. Because raw land is a buy and hold investment by nature, it can be awhile before your land appreciates enough to produce cash flow. If you are a novice investor, you must perform an honest evaluation of where you stand financially. If you are a seasoned investor, you must assess the state of your finances in terms of your current investments and how you want your business to grow. If you are inherently frugal and make money saving a hobby, it is likely that you will realize success as a raw land investor.
  • Will You Prioritize Research And Due Diligence? Raw land investing is all about asking the right questions, and if you’ve never purchased vacant land before, you are probably not up-to-date on the jargon and terminology. Before investing in any land, it is vital to first research the market. Has there been recent development in the area? Is your plot of land in the path of future growth? If the answer is yes to either of the above question, your property already meets some crucial criteria. Next, you should talk to your lawyer, the seller, and you inspector’s about the zoning on the property. Are there clear boundaries drawn on the plot? Is it zoned for commercial, residential, industrial, mixed-use, or agricultural development? What was the land used for previously? Asking and getting specific answers to all these types of questions is an absolute must. Also be sure to ask questions about the land’s topography, required annual taxes, available public utilities, usage restrictions, and road access. Minding due diligence and researching the right questions is what sets apart the successful raw land investors from the not-so-successful raw land investors.
  • Do You Have Support? Unfortunately, raw land investing – or any type of real estate endeavor for that matter – is no “get rich quick” plan. It takes a lot of hard work and perseverance to realize success in the real estate investing world, which is why a solid support system is crucial to have. While it is important to rely on yourself as an entrepreneur, your own personal cheerleader is nice to have when times get tough. Whether this be a business partner, fellow investor, or family member, as long as you have someone to talk through your decision making process with, you are more likely to be successful compared to someone going into raw land investing alone. If you are having trouble finding your support system, consider joining a local REI group or even create your own meetup.com group. Isolate yourself from the naysayers and negative nancy’s in your life and find people who are there to help you stay motivated.

If you’ve answered yes to at least three of the above questions, consider raw land investing as your next business venture. If you’re ready to take the next step, contact an expert member of the Asset Quest team today.

 

Orlando housing market heats as home prices outpace wages

With Orlando home prices rising six times faster than wages in the last year, competition has revved up for condos and townhouses, a new report shows.

The smaller, more affordable residential options represented just 12 percent of the 3,508 home sales in an area of mostly Orange and Seminole counties last month. But prices of those units rose at more than triple the rate of single-family houses during the last year, according to a new report by Orlando Regional Realtor Association.

What the market has essentially done is come full circle with rent versus purchase, and right now, the pendulum has swung to purchase.

Condo and townhouse prices have spiked to the point where developers will likely look at building another condominium tower in downtown at some point during the next two years as average sales prices continue increasing above $300 a square foot. It’s been about a decade since the urban core saw a new condo tower.

The mid-point price for a single-family home in the core Orlando market during March was $249,900, which was up 6 percent from a year earlier. Prices for condominiums and townhouses were about half that amount and increased more than 19 percent during that time.

Stress on buyers continues to mount in Central Florida with midpoint wages of $58,406 remaining roughly flat for the previous yearlong period, while home prices have grown about 6 percent. Interest rates remained flat from a year earlier and edged down slightly to 4.29 percent in March from February.

In addition, the supply of listings has shrunk to near-record levels of 2.2 months, which is down from a year and a month earlier.

From a month earlier, the overall median price for all types of Orlando-area housing in March was largely flat at $230,000 despite the downturn in supply. Sales were also relatively flat from February.

Orlando’s housing market continues to be tugged by opposing factors, such as low inventory and high demand.

Of the four counties in the Metro Orlando area, only Osceola showed an increase in year-over-year sales with 5.9 percent growth. Lake County sales declined 4.4 percent; Seminole County was down 3.7 percent; and Orange County sales slipped 2.9 percent from a year ago.

To learn more about the Central Florid real estate market, contact 9 Core Realty.

Realtors say NABOR’s latest numbers don’t come as a surprise

Sales of homes above $1 million in Naples during the first quarter of 2018 drove the market, increasing 61 percent compared to the same quarter of 2017, according to the First Quarter 2018 Market Report released by the Naples Area Board of Realtors. NABOR tracks home listings and sales within Collier County (excluding Marco Island).

January’s results led some to question expectations for the year when compared to last, yet in February the market gained its stride, accelerating in March with closed sales shooting ahead to end the first quarter on a very impressive note. According to NABOR monthly reports, January had 672 closed sales, February reported 672 closed sales, but March kept agents very busy with 942 closed sales, driven by a strong high-end which included a number of new construction condominiums just delivered.

Pending sales in the first quarter of 2018 increased 3 percent to 3,177 compared to 3,097 in the first quarter of 2017. Although pending sales for both single-family homes and condominiums over $1 million increased by double digits, it was the $2 million and above condominium market that raised eyebrows among brokers who reviewed the reports.

Tourism was up in our area this season compared to last year, so it’s not surprising that we would end with strong pending sales for the quarter. But experts weren’t expecting to see a 109 percent increase during the quarter in pending sales for condominiums over $2 million.

Coco Amar, a managing broker at John R. Wood Properties, said the condominium market offers some very good investment opportunities, especially at both ends of the market. “The top and bottom price categories are where both the inventory has grown and the prices have dropped.”

As reflected in the market’s year ending statistics (the 12 months ending 1Q 2018 versus the 12 months ending 1Q 2017), there was a 69 percent increase in closed sales of condominiums in the $2 million and above market, and a 17 percent decrease in the median closed price to $2,450,000 from $2,962,000 in 2017. Despite rocket sales in this high-end sector during the 1Q 2018 (179 percent increase) and a drop in median closed prices for the first quarter (24 percent decrease), the inventory increased 5 percent. Similarly, median closed prices for condominiums in the $300,000 and below price category dropped 1 percent to $199,000 from $200,000 in the first quarter of 2017, but inventory increased 3 percent in 1Q 2018.

The NABOR First Quarter 2018 Market Report provides comparisons of single-family home and condominium sales (via the Southwest Florida MLS), price ranges and geographic segmentation and includes an overall market summary.

 

Florida real estate market healthy but challenged

The Florida real estate industry is healthy, though several thorny challenges confront residential sales. Last year, foreign buyers bought $23.8 billion in Florida real estate, more than double the figure from a decade ago. Seventy-three percent of those 2017 purchases were all-cash because wealthy international buyers don’t need mortgages. The foreign property purchases account for 11 percent of the value but only 6 percent of the sales volume, indicating those purchases were primarily high-end homes.

The top international buyers of U.S. real estate last year came, in order, from China, Canada, Mexico, India and the United Kingdom.

Although most of the Chinese purchases were in California, the Florida market certainly has a larger share of foreign investors.

The state is also raising the confidence of foreign buyers with safe property investments that are bound to appreciate.

At the same time, the trend lines indicate a decline in international buyers.  The potential outcomes of higher tariffs on Chinese imports and the impacts of NAFTA’s demise on Mexico could boomerang on the U.S. and cause a global recession.

During the first quarter of 2018, a rising number of households expressed more confidence in the economy and their financial position, but only 68 percent of consumers felt now is a good time to buy a house, the lowest percentage in two years.

Income, debt and anxiety are stopping some from buying. The very, very competitive nature of the current residential market — with inventory down 13 percent, prices up 9 percent and mortgage rates expected to rise again — is being met with caution.

From 2011 to 2017, income grew by 15 percent but housing prices surged by 48 percent. This is a big concern for renters and an obstacle to converting to home ownership.

Consumers should not wait for mortgage rates, at 4.5 percent now, to fall, not with the Federal Reserve forecast to raise its benchmark interest rate two more times this year and three in 2019. Two years from now, mortgage rates could be 6 percent. Don’t take the current rates for granted.

While national existing home sales rose last year to their highest level in 11 years, the pending home sales index has stalled and inventory continues to fall.  Builders have been under-producing and the annual increases in construction since the subprime disaster have been very minimal.

To invest in the Florida real estate market contact an expert member of the 9 Core Realty Team today!

 

Naples has 15th-richest ZIP code in America

A Naples ZIP code ranked number 15 among the top 20 richest in America. To no one’s surprise, Naples’ 34102 ZIP code made the charts with the help of neighborhoods such as Port Royal having some of the most sought-after estates in the country.

According to a 2015 Internal Revenue Service data analysis done by Bloomberg, Fisher Island, just off Miami, was named America’s richest ZIP code. Atherton, Calif., was second and Palm Beach was third.

Naples is home to celebrities and some of America’s wealthiest families, who are willing to spend a lot to be close to the pristine beaches and enjoy some privacy in paradise.

Celebrities with homes in Naples include Judge Judy Sheindlin; Shahid Kahn, one of America’s richest people in 2018, according to Forbes; legendary rock musician Bob Seger; retired PGA champion Fuzzy Zoeller; and Gov. Rick Scott, who owns a beachfront mansion in Port Royal.

The Port Royal area has been called one of the most prestigious neighborhoods in Southwest Florida and is considered a landmark community with its white sand beaches off the Gulf of Mexico and 500 residences, many of which are multi-million-dollar mansions.  Last month the 34102 ZIP code had 17 home sales, according to Collier property appraiser data, with 13 of them  for $2 million or more.

Vacant lots in Port Royal have sold for as much as $4 million and waterfront homes with canal access for $5 million. If you want a beachfront mansion, expect to spend double that.

According to the Census Bureau, the median value of owned homes in the 34102 ZIP code was $770,000 in 2016.

Currently, the most expensive home on the market in Naples is a Port Royal beachfront mansion listed for $60.9 million.

A five-bedroom island colonial home in Port Royal sold in February for $16.1 million, making it the most expensive home sale so far this year. The waterfront mansion at 4295 Cutlass Lane sold for $1 million less than last year’s most expensive sale of $17.7 million at 3750 Rum Row in Port Royal.

However, the most expensive home sale in Naples within the past five years was a $46 million home in Port Royal in 2015.

There are currently more than 30 homes priced at or above $10 million in Naples. That represents about 2½ years of inventory based on the 2017 absorption rate.

With neighborhoods such as Port Royal and high-end home sales on the rise in Naples, one would expect the average income of Naples’ residents to match the lifestyle.

Unlike Fisher Island, with an average income of $2.5 million, Naples’ average income in 2016 was estimated at only $84,830, according to the Census Bureau.

The majority of luxury homeowners in Naples are “snowbirds;” retirees who own a second or vacation home and return north after the winter or spring.

Naples also recently was named the best place to retire in the U.S. and the sixth-best place for secondary home markets nationwide, according to a study from SmartAsset.

To learn more about investing in the Naples real estate market, contact an expert member of the 9 Core Realty team today.