Which is a better investment: Buying a home inforclosure that isn't close to anything, but has great land,

Asked by Kari, Hastings, MN Mon Apr 27, 2009

and is actually worth $300,000 more than the bank is asking for it? Or staying at present home in town and buying a small lake home property to be used mostly during the summer?

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JerryBezdicek, , Hastings, MN
Mon Apr 27, 2009
BEST ANSWER
That is a tough comparison because owning a lake home is also an investment in quality family time which to me is a good investment. If you wanted to just compare them from a financial standpoint, I'd always recommend diversity, If you purchase the out of town property all your eggs will be in one basket. The assumption is that the future value will go up but it will go up on your lake property also. My suggestion would be to go for the lake home.
Web Reference:  http://www.BezdicekHomes.com
1 vote
Frank D'Ange…, Agent, Minneapolis, MN
Sat May 2, 2009
Hi Kari,
At first glance your question appears to be comparing apples with oranges. However, it's obvious to me you're simply asking a best investment option. Purchasing a rural property priced at apparently much lower than it's value vs purchasing an additional piece of real estate to be used as a vacation home.

Price vs selling time on a singleton unit matter very little. If that rural piece is still on the market at an apparent discount, some might think it's not worth 300k. It's worth what the eventual buyer will pay. The question is; How many buyer are there or will be for that parcel today and/or in the future? If you have a hankering to own a rural property like that sometime in the future, then your investment question is tugging on your dream.

In my opinion, the real estate investment opportunity or formula should be calculated something like this:
THE AMOUNT OF REAL ESTATE X THE # OF YEARS OWNING = YOUR REAL ESTATE WORTH
Buy more now and hold. Buy were the populations are now and your R.O.I. is more assured when you decide to transfer or liquidate those investments.

JMHO :)
Frank D'Angelo Broker
Web Reference:  http://www.allmetrohomes.com
2 votes
Teri Eckholm, Agent, St Paul, MN
Mon Apr 27, 2009
Hi Kari!

That is a tough question to answer because there are so many variables. You could find a really good deal on a small lake place too. Every property is very different and every buyer has different needs. If you really want a lake place, then the home with the great land might not be a good deal for you. Location is always important and if the home with the great land really was worth $300k more than the bank is asking, there would be multiple offers on property. It may be assessed higher than it is really worth.

You need to ask yourself exactly what you really want, then decide whether what is available is a good investment.

Good luck with your decision!
Web Reference:  http://www.terieckholm.com
1 vote
Aaron Dickin…, Agent, Champlin, MN
Mon Apr 27, 2009
If the bank owned house has been on the market more than 2 weeks and hasn't sold than it isn't worth $300k more in today's market. Will it be worth it again? Yes, some day but who knows when.

The advice you are looking for requires a lot more discussion and specificity than you will be able to get here. It all depends on the specifics of your situation.
Web Reference:  http://www.AaronSOLD.com
1 vote
Donald James, Agent, Edina, MN
Thu Apr 7, 2011
Hi Kari,
If you are looking for strictly investment information I use several investment calculators that determine return on investment, cash flow, pre-and post tax earnings, cap rate, etc. How long are you planning to hold the property before you expect to realize a return?

I am wondering if the home is really worth $300,000 more than the ask. Foreclosed properties in Hastings average 29% less than traditional sales. We do a Comparative Market Analysis and a Market Trend Analysis to determine true market value today and forecast future trend for the property. My initial offers on these depend on the analysis results particulary the Market Trend Analysis.

Lake homes have been hit by the same market conditions and we have a number of great deals on these as well. Let me know if we can assist you.

Donald James
Weichert Advantage
651.253.7117
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