Posted 2/28/2024 08:58 (#10643246 - in reply to #10643177) Subject: RE: with all the post ranting against the possibility of land values
thinkstoomuch - 2/28/2024 08:26
SodbusterIII - 2/28/2024 08:12
going down
it doesn't take long to see who has their neck stretched out.
Would an investment in renewable electric projects or companies be a better investment if they can get land cheaper?
They really isn't a better way to counter land price decline other than selling. Is there?
well Not buying is actually a better counter to land price decline than selling in many cases. So lets say you have 2 qtrs of land you bought 10 years and 7 years ago you owe 40% of the original purchases price but land has doubled in value since you bought it. what would be better to use that land as collateral for another purchase or simply sit on the land and pay it down?
5,000 x 320 =1.6million x 40% = 640 thousand left to pay off and 2k per acre of debit , add a qtr @ 10k or 1.6million of debt total debt with new purchases is 2.24 million in debt over 480 acres or $4,666.00 per acre of debt if land goes to 5k bank will sell you out.
320 sold at 10K is 3.2million less 7% sales commission leaves 3 million or 1.4 in capital gains to have taxes paid on less 640k of original debt leaving you with capital gains matters which state you are in but lets say fed and state take 33% of the capital gains so lets say you have the 640k in payments and the 400k in capital gains leaves you with 2 million of a 1.6 million investment. vs continuing to pay down a manageable debt on a good property. if land drops by 70% over the next 5 years you continue to pay of the debt and you have a valuable property to use to by land @ 3k per acre. if not your heirs get a step up in basis and you avoid capital gains and still keep the rent off the land to use to enjoy your retirement years.
so selling is not the only way to combat land values falling.
with all the post ranting against the possibility of land values
