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Is property still a good investment?
DH and I plan to build our home. Right now, he is finishing up his Master's degree and we have a baby on the way. We don't have the time to dedicate to planning/designing the house we want, we don't have the time to do upkeep on a house, and we don't have the money to pay for everything we would want/need while building the house.
But, we thought we could help cut down the futures costs if we bought some property now. We thought we could go look for the size and type of land we want in the place we want to live and work on paying it off in the next year. We think in about a year from now we will be ready to start building and it will be nice to be able to knock off the cost of the land. We would be looking to spend less than 40k (probably about 25k, judging from the online-looking we've been doing) on land and would put down about 10k. The bank says we won't have a problem getting a loan from them.
I am concerned about whether or not this is a good investment. There is an old saying, "real estate is always a good investment", but that's obviously not true anymore. If we decided to move and didn't want the land, would we be able to get rid of it or are we going to be stuck like so many other people who can't sell their homes? Is it too risky? Anyone have any thoughts?
Re: Is property still a good investment?
RIP Dr. Irving Fishman - 10/1/19-7/25/10 - thank you for holding on for me.
You made my wedding day complete.
My Grandpa (a very rich, wise man who made his fortune totally on his own, without any inheritance) told me that you shouldn't look at property as an investment. I know that's contrary to a lot of mainstream ideas, but here's the thing: if you make money off of your land, you should consider it awesome, but it shouldn't be the main reason you buy the land/property in the first place.
If you factor in your mortgage, taxes, and repairs/improvements you have to make, your rent on wherever you are still living, and any other property-related expenses and it's STILL less than what you're paying in rent, go for it. Otherwise, take the money you would be investing in the land and put it into a secure investment. You'll still be investing the money, but you won't be wasting any.
I personally wouldn't buy anything right unless I was 100% certain that I would be staying there for at least 5 years, or planned on renting it out if I moved to another property. Real estate was traditionally a good investment as the value typically only goes up over time - obviously no investment is a guarantee as now the housing market has collapsed and a lot of people are stuck in houses where they are breaking even or losing money on if/when they have to sell it.
If I were you, I'd just start saving all that money towards land+house in the future. I really don't think that buying the land now is going to save you any money, and at the cost of being risky if you have to sell it or find out you can't get a loan on it to build a house. That way you will be able to put a larger down payment on the land+house when you guys are ready, which will lower your monthly payments overall and can get you a better interest rate without having to pay PMI (private mortgage insurance).
Ditto Maggie'ssmart grandfather - do not look at property/housiing as an investment. It can go up and it can go down.
Wait until you are ready to move ahead and then make your decisions. Meanwhile pay off consumer debt and save, save, save.