Buying Land in Anticipation of the Next Land Boom
The Real Estate Market has consistently been the safest place to invest your money. Many realized great gains during the Boom of the 2000’s. Especially when it came to the Land Boom. Buyers were buying residential lots for as little as $5,000.00 – $10,000.00 in Central Florida and realized gains of 300%.
Right now, Land in Central Florida is back to the lowest prices since the late 70’s. Residential Lots are going for as little as $2000.00.
What makes this a great investment in today’s uncertain economy? Land will always be a valuable asset. The state of Florida continues to see over 1000 people a day move here. This is one of the most consistent facts in spite of the Economic decline. And those 1000 people a day need someplace to live. (see State of Florida statistics at the end of this article)
As the Real Estate market begins to see a growth spurt due to the influx of Foreclosures on the market, eventually the foreclosures will dry up and the new construction will begin again. And you can only build new construction on vacant residential land.
If we had a crystal ball back in 2002 we would all be millionaires by now. And the best measure for predicting the future is looking at the past. In 2002 you could purchase a residential lot for $2500 – $5000. When the lots started selling feverishly, those prices increased monthly, then weekly, then daily. There were times if you didn’t put your escrow deposit down on time, your lot would increase in price by $1000 – $5000 over the course of a weekend.
I had a customer who bought 4 lots in Marion Oaks, a sprawling subdivision on the South West side of Marion County. She paid $3000.00 per lot. Within 4 months, her lots were worth $15,000.00 each. She held off on selling them. 6 months later, she decided to sell and they sold for $60,000.00 each! Not a bad investment for less than a year of ownership.
Of course nothing in life is guaranteed. But when you factor in the option of Seller Financing with as little as $500.00 down, you could easily purchase 5 lots for the price of one paid in cash. The Seller Finance terms are moderate. 12% interest over as many years up to 30 that you wish to pay. Your monthly payments could be as little as $40.00 a month or as much as $100.00 a month depending on your timeline. On average, a person would finance for 5 yrs. Now with this said, by opting for the Seller Finance, you can sell your lot to another individual and pay off your note and gain a profit – even though you only paid in $500.00 plus your monthly payments.
Example: You purchase a lot under Seller Financing for $6,000.00. Your down payment is $500.00. You choose the 5 yr terms. Your monthly payment is $65.00 per month. 6 months down the line, land prices increase to $10,000.00. You’ve paid approximately $1000.00 on your lot. You could turn around and sell the lot to a new buyer for $10,000.00 pay off your note and walk away with $3,000.00. (closing costs, taxes, real estate commission, doc stamps and interest taken into account) Multiply this by 5 or 10 lots in your investor portfolio and you can see where it would be easy to earn $30,000.00 in a short period of time, using very little of your own cash.
Now is the time to get in on Land purchasing. Build your investment portfolio before prices increase and be the leader of the next Land Boom.
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