Land owners, cash or financing for purchase?

[KactusKiller]

For those of you that have purchased land in last day 10yrs, did you pay cash or financed?
Does it really matter as far as long term investments are concerned? Obviously price of land is steadily increasing. I purchased a piece of property this summer and financed it.
Obviously cash is king but if you were looking at buying other rural properties is it a good idea to purchase if you have to finance all of them? I'm looking at 5-10 yrs for possible sale or turn around and even then my plan is to purchase, improve and resale only to take the sales proceeds and purchase more land until I hit a size that I don't feel like I need more.

Just curious what the percentage of people that buy rural land how they have purchased it.

[Antlers86]

We financed 88 acres this last May. 10 year note I believe. Looking at purchasing additional 15 acres this year that join it but will probably pay cash for them. Guess it all depends on how much cash you have, interest rate and the price of land. The land we purchased even with final interest added will still be under market value when all said and done. Throwing away money with interest but able to afford making many improvements to the place in the beginning. We however don't plan on turning it around anytime soon.

[RiverRat1]

This could be the worlds longest reply but I will sum up. Get a financial advisor...ok, scratch that as they will obvious tell you to finance so you can invest the rest with them.

Interest rates are still low but they will be rising. More people each day realize interest rates will rise faster than the FEDs say they will. The markets will correct down sooner or later when rates start moving up more. Why? Because when rates go up a person can put money into safer investments. The markets are up because there's no other place to put money unless you want a less than 3% return. But the markets will rise again after they digest the higher rates. Problem is no one knows how long that will take or how high rates will go to try and keep inflation under wraps.

If I was to buy another property knowing I would hold it for 10 years or longer I'd probably pay cash as long as I was left with enough to last me 5-10 years if I needed it.

I promise you one thing. Once we enter higher rates and the markets start to fall the media will be doom and gloom. They will reference the 80's and other high interest times.

Markets are not in the best spot to make more in than you would off land over the next 5-10 years. They may but very well may not. And keep in mind land may become harder to sell for a time after they raise rates. We've had rates so low for so long people don't even remember high rates or how it affects buyers anymore.

[oldtestamentman]

I always finance mine with the lowest rate and longest term possible. I went Texas Vet 5% down, 30 year term and also conventional 25% down, 20 year term on my last two. Rates for both were in the 7s. The interest is tax deductible so there is a benefit. Pay down the principle as fast as you can, but set yourself up for easy monthly payments for if/when times get tight. I make principle payments to own the parcels in 5 to 7 years with no prepayment penalties. Equity builds up fast when you do this.

[KactusKiller]

This could be the worlds longest reply but I will sum up. Get a financial advisor...ok, scratch that as they will obvious tell you to finance so you can invest the rest with them.

Interest rates are still low but they will be rising. More people each day realize interest rates will rise faster than the FEDs say they will. The markets will correct down sooner or later when rates start moving up more. Why? Because when rates go up a person can put money into safer investments. The markets are up because there's no other place to put money unless you want a less than 3% return. But the markets will rise again after they digest the higher rates. Problem is no one knows how long that will take or how high rates will go to try and keep inflation under wraps.

If I was to buy another property knowing I would hold it for 10 years or longer I'd probably pay cash as long as I was left with enough to last me 5-10 years if I needed it.

I promise you one thing. Once we enter higher rates and the markets start to fall the media will be doom and gloom. They will reference the 80's and other high interest times.

Markets are not in the best spot to make more in than you would off land over the next 5-10 years. They may but very well may not. And keep in mind land may become harder to sell for a time after they raise rates. We've had rates so low for so long people don't even remember high rates or how it affects buyers anymore.

The interest rates effecting resale is something I did not think about. I figured if times got tuff I could always sale at purchase price even if below market value just to cash out. But if rates are too high you may be relying on mainly cash sales which would prob further impact sales price.

[KactusKiller]

I always finance mine with the lowest rate and longest term possible. I went Texas Vet 5% down, 30 year term and also conventional 25% down, 20 year term on my last two. Rates for both were in the 7s. The interest is tax deductible so there is a benefit. Pay down the principle as fast as you can, but set yourself up for easy monthly payments for if/when times get tight. I make principle payments to own the parcels in 5 to 7 years with no prepayment penalties. Equity builds up fast when you do this.

that is a good point on the long term loans. Thats my biggest fear is having another crash like 2008-09 and not having the liquidity of cash that you put down( which in my case is 20%, not a vet).

[oldtestamentman]

Extra Principle payments of $50-100 a month will take years off your term if you do it consistently just like a home mortgage. Works like the Ramsey snowball theory.

[oldtestamentman]

I agree with your liquidity concept. I always keep a good amount liquid for deals to good to pass up on just about anything from cars to boats and RVs. Cash is King if you like to flip things when a deal presents itself. Also for home improvements, which I'm doing right now for about 50 cents on the dollar VS hiring a contractor. Cash is King with painters, floor and décor guys.

[KactusKiller]

I agree with your liquidity concept. I always keep a good amount liquid for deals to good to pass up on just about anything from cars to boats and RVs. Cash is King if you like to flip things when a deal presents itself. Also for home improvements, which I'm doing right now for about 50 cents on the dollar VS hiring a contractor. Cash is King with painters, floor and décor guys.

Yes sir

[txwhitetail]

I guess I venture off into too many side deals to make extra $$$ on the hustle. Bigger purchases I like to finance at low interest and have cash on hand for the next deal. Just me. I know lots of folks don't like having anything financed.

[Darton]

Financed, but cash can still be made by forcing appreciation no matter how long you hold it especially coupled with a 1031 exchange Latest rate was 5.20%

[KactusKiller]

Financed, but cash can still be made by forcing appreciation no matter how long you hold it especially coupled with a 1031 exchange

Pm me to expand some when you can.

[Darton]

PM sent

[Drycreek3189]

I paid cash for mine, but I wanted to do a timber stand improvement first thing with no strings attached.

[junkmanhunter]

I purchased 13 acres last summer to build on. I paid cash and then replatted it to 2 acres and an 11 acre plot. I will pay cash for my shop, sale house then live in shop while I build house. Then everything I will have will be paid off. Just my thoughts on it.