Too Weak to Defend Part 2 – Baby Steps: Buy Land off the Plan

Share

I was too weak to defend, so I attacked!” General Robert E. Lee talking about the battle of Chancellorsville.

It was late 2008 and I’d been out of the real estate market since late 2007 when we bought a house to live in. Then the business went sour and I was on indefinite hold.  I was waiting for finances to improve.
Then some land came up for sale just south of town (Alice Springs). The blocks were big – over 1000 square meters – and only required $1,000 to hold. Titles would not be issued for a long time; 6 months or more. I figured that would be plenty of time to have our finances sorted and I also figured it would be a good idea to get a few blocks since land is always such a hot commodity in Alice Springs. We could build on one block and sell the other.By the way, the blocks were selling for $182,000 a piece. Now this seems like a lot of money to me. But, I’d been in the Alice long enough to know that land prices rise; and rise quickly. I realize that sounds a lot like speculating and do you know why? Because it is.

 

But, here’s my rationale. I ran the numbers to build a house on one of these blocks and it came out to less than what it would cost to buy an existing home. Therefore, it seemed to me buying the block now would at least fix the land price. Could the land prices go down? Could happen. That’s always a risk.

But, what seems like an outrageous price today appears cheap tomorrow. That seems to be a good catchphrase for the Alice. For instance, many years ago, golf course lots were selling for about $30,000. Many people in town today remember. The ones who remember most clearly are the ones who didn’t buy.  “Who in their right mind would pay $30,000 for one of those lots?” was the standard objection.  Well, one of “those lots” sold a few years back for the handy sum of $360,000 plus! You couldn’t get a slice of golf course land today for under $300,000. If you could get it at that price you’d be very lucky. Grab it!

So, back to the new development. Large 1,400 square foot lots just south of town overlooking the MacDonnell Ranges. All yours for $182,000 each. The price seemed reasonable to me. And, with the long settlement time, I have visions of selling one at a small profit to help offset the cost of the other one. That was my thinking. We put money down on two blocks.

As of this writing, the titles have not been issued. Still waiting. But, that’s alright. Alice Springs land prices keep going up!

Anyway, it seemed like an easy and not too disruptive way to get back into the real estate market. A way to ease back in; not taking on too much. I had enough money in our line of credit to buy both blocks without a loan from the bank. So, funding wasn’t a problem. But, I’d have to be careful because I’d need to keep this money ready when the titles were issued. I’d only have 14 days to organize payment. Hopefully, by then finance would ease up and I could fund these lots with a bank loan. If not, then I’d just make due using my line of credit.

This was my first foray back into the real estate market after over a year of inactivity. Not a big or bold move. But, it got me started again. It wet my appetite. I was ready for more action.

Go on to read Too Weak to Defend, Part III.

Tags:
Previous Post

Too Weak to Defend Part 4 – Where’s Chinchilla?

Next Post

Too Weak To Defend Part 1 – Introduction