Hello MadMatters!
If you happen to be following along on my YouTube channel, you would know that Jim and I have recently acquired 10 acres of land/swamp in the quaint little town of Geneva, FL. This is actually the property that my mom and dad lived on when I was born, and it's where I was brought to from the hospital. :)
If you haven't been following along, shame on you, but feel free to catch up by watching the video by
CLICKING HERE!
While owning 10 acres is initially exciting, we are quickly learning that it is entirely overwhelming at the same time. What's awesome is that the possibilities are almost endless. The downside to this however is... well, that the possibilities are almost endless. We've had the property for almost a year now, and here are the options we have come up with.
1)
Sell it! One of the first things I did was list the property up for sale, just for Esses & Gees. It's 10 acres of property with city water, electric on site, a pond, and the impact fees have already been paid. That should be worth something, right? After about an hour spent on Zillow and Realtor.com, it became quite obvious that finding "comps" for land wasn't anywhere near as easy as it is for houses. We called our realtor and ended up going with a starting list price of $124,900. Then we crossed our fingers.
There was some activity... I think we got a cash offer of $75,000. We weren't interested, obviously. Another thing that stayed in the back of my mind during this process was a little thing called Capital Gains Tax. Since the property virtually cost us nothing, we could potentially lose 25% of the sale price OFF THE TOP! Thanks for playing. 25% doesn't sound too bad until you do some math. Let's just assume for a second that we accepted that $75,000 offer...
$75,000.00 x 0.25 = $18,750.00
or
$75,000.00 - $18,750.00 = $56,250.00
So basically, we could sell the property for less than we thought it was worth, give the government almost $20K (I could buy a new car with that), and walk away with less than half of what we actually wanted... and let's not forget about closing costs. Nope, this wasn't going to cut it for me.
2) Develop it! During my initial Zillow and Realtor.com research, I found that properties with a dwelling on them were a) worth a heck of a lot more, and b) sold faster than vacant land. So, off I went looking for used mobile homes. I found a few decent ones around $5K. Not bad. But then I have to have it moved from wherever it is to Geneva.
A little Google magic told me that I could be looking at anywhere between $2K-$5K just to move it and have it blocked and strapped down. Yikes! But before I could buy a mobile home and have it moved, I needed to have some land cleared so that there was actually somewhere to put the dang thing.
So, I made a few phone calls. Land clearing isn't cheap either! Damn. Yes, this would be another $5K-$7K. So the land is cleared, the trailer is bought, moved to site, blocked up, tied down... but then what? Well, there's plumbing, electrical, sewer (oh yeah, that was $4.5K), HVAC, plus whatever cosmetic/structural repairs need to be made to a $5,000 trailer that was just moved 50 or so miles...
Mobile Home Purchase = $5,000.00-$7,500.00
Moving Mobile Home = $2,000.00-$5,000.00
Land Clearing = $5,000.00-$7,000.00
Septic Tank = $4,5000 (and this was a GREAT price)
Everything Else = $????.00
$16,500.00-$24,000+++
Even on the low end, this option was going to wipe out our savings account and probably max out a credit card or two, and for what? To have a piece of property that still may not sell. Nope.
3)
Live on it! To avoid losing tens of thousands of dollars to taxes, Jim and I could always live on the property ourselves. If we like it, awesome, no tax loss. If we don't, we could tough it out for two years, which would drastically reduce the amount of Capital Gains Tax we would have to pay for selling. Sounds like a pretty smart idea, huh? Well let's see how far this gets us...
If Jim and I are going to leave the comforts of our first home in the city (if you can call Deltona city), we didn't want to feel like we were "roughing it". The first thought of course was to have a house built. Wouldn't that be nice? The only problem that I see with this is that building a house can be quite costly. Sure, we could probably build a small house with builder grade finishes and be okay, but we already have one of those. If we're going to build a custom house, I want it to be a custom house. While we both make decent money, building a large home in the woods at $100+ per square foot doesn't seem like the greatest idea.
So the next thought we had was to check out new mobile homes. They've come quite a long way, both structurally and cosmetically. We made the drive out to Ocala and visited a few manufacturers. We ended up selecting a Live Oak home. This model was a 4 bedroom, 2 bathroom, 2,400 square foot beauty with 9 foot ceilings. It was even finished in drywall!
So we talked to the salesman, made our selections, gave him all the information we had about the property and left. He got back to us a few days later with the numbers. For this option, we were going to do a land-in-lieu sort of thing. Basically, we put the property up as collateral against the mobile home. They then roll everything in to the financing, and I do mean everything. Land clearing, septic, the whole sha-bang! After all was said and done, this mobile home was going to set us back about $112K. This made me rethink everything...
Was it really a wise decision to spend over ONE-HUNDRED-THOUSAND-DOLLARS on something that was only going to depreciate in value. This would also mean that Jim and I would now have two mortgages. Sure, we could probably rent our current house out for about $850 per month. This would more than cover the mortgage on it as well as help with the mortgage on the new home. But what if the house sat vacant for a while? Sure we could afford a month here and a month there, but what if it sat vacant for 6 months? We would now be on the hook for two mortgages for the next 30 years. That's a scary thought.
So what did we end up doing?
Nothing... we've done absolutely nothing.
Have any of you been in the predicament? What did you do? What would you do in our shoes? I'll be looking for your responses! :) Until then...
K-LUVYABYE!