Sell or hold onto small land investment?

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Topic Author
heymary
Posts: 35
Joined: Tue Jan 29, 2019 6:36 pm

Sell or hold onto small land investment?

Post by heymary » Wed Apr 24, 2019 12:56 pm

HI there,
I've been posting to try to plan for an "unexpected" early retirement at age 58-59.
Thanks to advice I've done an asset reallocation in my cash/investment accounts and feel good about that.
I've also got a couple of rental properties, that I'll hold on to for now.
But I have question about a small bit of land that I bought about twelve years ago up in canada.
It was inexpensive (I think it was $8K) and I recently spoke to a real estate agent who suggested listing $70K
Most of the increase was in the first 5 years I bought the land, when the tax assessed value went up a lot.
There has not been much movement in the real estate market / or my assessed value in that area for last 5+ years.
I'm paying very low property taxes ($500 a year)
The land is located next to a very pretty little town, and most buyers are looking to build second/summer homes.
Should I sell now and strengthen my investment accounts? (after paying a big cap gains)
Or should I hold onto the land until when I need to sell to raise money, maybe see further gains.
Here is my profile again (updated since I moved some cash into invest account & started an ROTH IRA account).

Age 58
Current rental Income (net/net) $1000 a month
Current annuity: $900 a month
Cash on hand $120,000 (revised)
Investment account: $45,000 (new)
ROTH IRA: $6500 (new)
SEP IRA: $440,000
Real estate (both houses): $950,000
Mortgages (both houses) $209,000
SSN @ 62 $1200 a month
Tax status: single, california

miamivice
Posts: 2194
Joined: Tue Jun 11, 2013 11:46 am

Re: Sell or hold onto small land investment?

Post by miamivice » Wed Apr 24, 2019 12:59 pm

I am skeptical on the gains you say. Land normally appreciates around 5% per year, so it should be worth about $14,500 right now. If indeed it is worth $70,000, then your investment has increased by 20% a year, which is not really believable unless there are extenuating circumstances (like rezoning).

DoTheMath
Posts: 318
Joined: Sat Jul 04, 2015 1:11 pm
Location: The Plains

Re: Sell or hold onto small land investment?

Post by DoTheMath » Wed Apr 24, 2019 1:00 pm

A standard piece of advice seems applicable in this situation: Ask yourself if you would buy it now for $70k (or, if you like, for whatever you would net after the sale). Therein lies your answer.
“I am losing precious days. I am degenerating into a machine for making money. I am learning nothing in this trivial world of men. I must break away and get out into the mountains...” -- John Muir

megabad
Posts: 2460
Joined: Fri Jun 01, 2018 4:00 pm

Re: Sell or hold onto small land investment?

Post by megabad » Wed Apr 24, 2019 1:29 pm

If it were me, I would sell it before too long just to avoid the potential hassle for my heirs. That said, I have no idea about the CA real estate market or tax implications.

miamivice
Posts: 2194
Joined: Tue Jun 11, 2013 11:46 am

Re: Sell or hold onto small land investment?

Post by miamivice » Wed Apr 24, 2019 1:35 pm

DoTheMath wrote:
Wed Apr 24, 2019 1:00 pm
A standard piece of advice seems applicable in this situation: Ask yourself if you would buy it now for $70k (or, if you like, for whatever you would net after the sale). Therein lies your answer.
The concern I have is that the real estate agent may be misleading the listing price in an effort to get a sale. No way can a property worth 8k 12 years ago be worth 70k today under normal circumstances.

riverguy
Posts: 496
Joined: Sun May 23, 2010 10:33 pm

Re: Sell or hold onto small land investment?

Post by riverguy » Wed Apr 24, 2019 2:04 pm

miamivice wrote:
Wed Apr 24, 2019 1:35 pm
DoTheMath wrote:
Wed Apr 24, 2019 1:00 pm
A standard piece of advice seems applicable in this situation: Ask yourself if you would buy it now for $70k (or, if you like, for whatever you would net after the sale). Therein lies your answer.
The concern I have is that the real estate agent may be misleading the listing price in an effort to get a sale. No way can a property worth 8k 12 years ago be worth 70k today under normal circumstances.
How does that make sense? A RE agent gets paid when something sells, unless it is different in Canada.

And why would you think that something 8k 12 years ago couldn't be worth 70k? Town expanding, more people wanting to move up there, etc. Entirely believable.

miamivice
Posts: 2194
Joined: Tue Jun 11, 2013 11:46 am

Re: Sell or hold onto small land investment?

Post by miamivice » Wed Apr 24, 2019 2:23 pm

riverguy wrote:
Wed Apr 24, 2019 2:04 pm
miamivice wrote:
Wed Apr 24, 2019 1:35 pm
DoTheMath wrote:
Wed Apr 24, 2019 1:00 pm
A standard piece of advice seems applicable in this situation: Ask yourself if you would buy it now for $70k (or, if you like, for whatever you would net after the sale). Therein lies your answer.
The concern I have is that the real estate agent may be misleading the listing price in an effort to get a sale. No way can a property worth 8k 12 years ago be worth 70k today under normal circumstances.
How does that make sense? A RE agent gets paid when something sells, unless it is different in Canada.

And why would you think that something 8k 12 years ago couldn't be worth 70k? Town expanding, more people wanting to move up there, etc. Entirely believable.
It's not believeable because real estate doesn't appreciate at 20% a year for 12 years in a row barring some extenuating circumstances. Simply doesn't happen. Otherwise everyone would buy real estate and and exit the stock market.

I meant to say 'get a listing'. Suggest some obsecene price to get the listing, and then come in later with a $15k offer and say that the best they can do.

Topic Author
heymary
Posts: 35
Joined: Tue Jan 29, 2019 6:36 pm

Re: Sell or hold onto small land investment?

Post by heymary » Wed Apr 24, 2019 2:35 pm

Hi there, thanks for your comments. To clarify
* The particular lot has some advantages (close to town, on town water, but outside preservation area, enough setback from cliff/shore, and wide enough frontage). Most of lots I've seen for sale don't have water, electrical.
* WITH THAT SAID yes, I think agent could be overstating list price, although, seriously, there is only one other real estate office active in area, so, he's not competing with anyone for the listing.
* No, I wouldn't buy right now, even at $40-50K, for any long term hold.
* Also worried that there could be zoning decisions in future that I wont even know about (like, water or set back) (for example the preservation area doesn't affect me but is something new)

123
Posts: 5137
Joined: Fri Oct 12, 2012 3:55 pm

Re: Sell or hold onto small land investment?

Post by 123 » Wed Apr 24, 2019 2:49 pm

Real estate prices go up and down. If the real estate market has gone up significantly since your purchase you should sell. Local real estate markets can experience prolonged periods of "feast or famine". If prices are up now collect your winnings.
The closest helping hand is at the end of your own arm.

User avatar
BL
Posts: 9142
Joined: Sun Mar 01, 2009 2:28 pm

Re: Sell or hold onto small land investment?

Post by BL » Wed Apr 24, 2019 3:05 pm

You don't say that you "love" it or that you want to spend some time there after you retire, so I say try to sell and get something positive now both for simplicity and because it is not giving you anything. Who knows the future, it is across international borders, and you don't mention if you have liability coverage either.

Topic Author
heymary
Posts: 35
Joined: Tue Jan 29, 2019 6:36 pm

Re: Sell or hold onto small land investment?

Post by heymary » Wed Apr 24, 2019 8:28 pm

I don't love it. I will never live there. Market is uncertain. And I don't have liability insurance (yikes) (YIKES). Thanks to all of you. I'm going to list it.

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