Cash out and buy land???

[5 Alive]

We are in our early 40's and long story short we are tired of the rat race and want to move to TN and kind of go off the grid as they say. Land in that area has almost tripled in value in the past 15 yeas, so would I be crazy to cash out almost all my investments to by land and build a small house? (it is 50 acres in a great area that is only going to go up in value) We have different ways we plan to make money to support our day to day expenses but this would burn up all our savings. Do I really need money sitting in a fund until we retire, when I could enjoy it now. And worst case scenario we sell we sell and put it back into the bank. Am I crazy?

[mikeSF]

We bought 100 acres in 1996 outside Clarksville TN. It's up 400 percent. Taxes increased 80% over the last few years. Sometimes it takes months to years to sell the land vs trading in stock based investments where you can have your money within a few days. We haven' built on the land. It's my play ground with our dog. It's nice having my own place to hunt, go plunking or just spend the day doing nothing. Good luck in your search and decision.

[Bamaman]

You don't give details on how much $ you're talking about spending, etc. Are you going to have to cash out 401K's where you'd have to pay a 10% penalty plus straight income taxes on the withdrawals? Also, what would your earnings potential be in this change of life? Putting a substantial down payment and finding owner financing is an option.

Send me a PM about where you're talking about going, and I can give you an honest opinion. I lived in Memphis and Nashville many years, and traveled East Tennessee for work almost every week for years. I know virtually every inch of the state intimately.

[5 Alive]

You don't give details on how much $ you're talking about spending, etc. Are you going to have to cash out 401K's where you'd have to pay a 10% penalty plus straight income taxes on the withdrawals? Also, what would your earnings potential be in this change of life? Putting a substantial down payment and finding owner financing is an option.

Send me a PM about where you're talking about going, and I can give you an honest opinion. I lived in Memphis and Nashville many years, and traveled East Tennessee for work almost every week for years. I know virtually every inch of the state intimately.

No 401k it will all come from mutual funds and the sale of our business. I know there will be some taxable income from that. Land is 50 acres for $200,000 but we may be able to negotiate. We plan on building a 800 to 1000 sq. ft home. No kids, no debt. and we could pay cash for everything but that would leave us close to empty. As far as income we are pretty resourceful and have some ideas. I'll PM you. thanks

[boneil]

Yes I think that is a crazy idea, but it's not my money or future.

I guess I don't see the upside here. You buy a piece of property that has already tripled in value, that leaves you broke and with no job, and in 20 or so years when you want to retire you have what exactly? A hope and a dream that the property will increase in value and that you will be able to sell it quickly for top dollar and then figure out your situation at a much older age.

What would you do if the property doesn't gain value or even loses value? I think you are underestimating worst case scenario.

[Bassin08]

A 800 to 1000 square foot home on 50 acres is considered a recreational property today and I’m pretty sure it will still be that way in 25 years. When the economy is bad, so is the market for recreational property. Keep your money invested in the market and never put everything into one basket. I would not do it.

[5 Alive]

What would you do if the property doesn't gain value or even loses value? I think you are underestimating worst case scenario.

I probably shouldn't have spilled so much personal information but we've been looking for the perfect piece of land and this one just pop up so I'm a little excited. Yes it is definitely more than I was looking to spend and maybe I need to rephrase my question to help ease my mind.

My investments typically return between 10 and 15% a year. Now factor in the fees and potential volatility the market could have with the next election and putting our money into land that I can enjoy for the rest of our lives sounds like a good idea. So my question is, seeing the bank wont let me carry two mortgages and I have a business and house to sell long before we could move to the new land. How can I buy it other than just paying cash? My thought is no big deal because I can't imagine land going down in value. If anything it seem to have higher returns and be more stable than the market.

[Bsktball55]

I would have no problem cashing out my stocks to buy land with, I actually plan to do that once I save up enough money. Might as well have something you can use instead of just looking at the money in the market. With that being said, my stocks are just extra money that I am saving up, I have a separate retirement account and Roth account that I won't touch. I would also be keeping my job. That's the part I would be scared about it cashing out all your stocks and selling your business and not having a for sure salary coming in.

[OH_Ranger]

If you would of cashed out a year ago, you would be a genius. Since you have no debt, just buy the land and keep working.

[Rangerdawg]

1o to 15 percent per year you should be a billionaire

[NitroZ7]

The problem with non-income producing real estate is that it always eats and never craps. Nothing wrong with buying something for speculative purposes but I would never allocate too much to it. You could get lucky but these things usually take decades.

I did a real estate transaction a few years ago where a few families got together and bought some land in Palm Beach County back in the 1950's. People died and kids inherited it and it got down to like 1/16th interests but I give them a lot of credit. They never sold it until 2016. They spent around $200k for it way back when and it was all vacant and when they sold it, it was around 50 million for the entire thing. It was a very big tract and things had developed around it by the time it was sold but that is a rare occurrence when you have that much time, discipline and means to wait that long.

[TampaJim]

IMO, the size of the parcel is too large. Love that you are going smaller, doing subsistence living.
However, you'll just end up getting drilled on taxes. Buy 10 acres, that's WAY more than enough.
You can very easily fit fruit trees, gardens, food plots to attract wildlife, a pond, etc. with leftover.
Which will greatly reduce your tax bill, property insurance, fencing needed, etc. Hope this helps.

As noted, land speculation days are nearly over. The tax man and insurance companies ended it.

[Shotgun]

I think real estate is still a good investment, just like stock investments you have to do your homework! And factor in you only live once!

[water rat]

Several thoughts to ponder.
First, If the area has already tripled in the last 15 years the chance of that trend continuing on a linear path is not that great. Typically up for awhile, then stable for years, then up again if desirable area.
Second, putting most of your net worth in an investment that is not easily liquidated carries additional risk. Perhaps less land and keep some $ in stocks or mutual funds as a hedge.
Third, can you get land that has agricultural or wildlife "exemption" to help with taxes? Just be prepared that most areas will carve out an acre or more for homesite and tax that and improvements at full market value.
Nothing wrong with going simple if that suits you.

[G3Ray]

I am hoping to get some land in clarksville myself.

[DewRonInc]

I have always favored land or rental compared to money investment in market. Rentals out of state, land where i live. work shop in another county. All has increased in value by way over 100 percent. Also bought some laundries, coin. All works well...Land is something they make no more of, money can be printed. you can not go wrong with land or property purchases. Problem is, the more you have to pay taxes....