If you bought land in California in the 1970s, you’d probably opine that land is a good investment. If you bought it in 2006, and now it’s worth a fraction of what you paid, your opinion would probably differ. Most knowledgeable real estate investors will agree that buying land is not a good idea, and this includes buying small parcels of land and/or potentially investing in a large land deal. There’s just way too much risk.
Land is speculative
Here is the issue with land: It’s a 100 percent speculative investment. You are 100 percent hoping that the value will go up to provide you a fair rate of return. And it might. But will it go up enough to provide you a fair rate of return for the extreme risk that you are taking holding that land?
Here’s the risk
Let’s say you buy $100,000 worth of land, and you pay cash. It’s still going to cost you money each month to cover property taxes and insurance. And, here’s the kicker: It’s also costing you the opportunity cost of capital.
You probably took $100,000 out of your mutual fund account, or other financial asset, to buy the land. And when that money was in the financial account, it was probably earning interest — let’s say 5 percent — but now it’s not earning anything because you took it out of your account to buy some dirt. So you’re really effectively losing 5 percent in wealth each year because you’re not earning that return. Unless, of course, the land goes up that much in value plus compensating for property taxes, insurance and other annual costs.
As an example, if you have $100,000 and put it into a mutual fund, you’d earn 5 percent, or $5,000, per year. That’s cash in the bank that you can reinvest to earn even more money. After 10 years you’d have your original $100,000, plus $50,000 to $70,000 additional cash/financial asset earnings.
On the other hand, if you bought land, you’d earn no interest or dividends, and after 10 years you’d have a piece of dirt that you’ve been paying taxes on. Will your land have gone up enough in value to match the returns you would have earned on a financial asset?
In addition to those significant financial issues, land also can be contaminated, undevelopable or have significant development restrictions, among other issues.
Who might consider land?
Land may be a good investment for home building companies and long-term corporate land investors with extensive development and entitlement skills and experience, and significantly diversified portfolios of land to reduce their overall risk. But for small investors, it’s a high-risk gamble with little chance of earning a fair rate of return. There are much better investment opportunities, such as stocks, bonds, mutual funds, rental properties or, quite frankly, heading to Las Vegas for the weekend (where, by the way, many an investor has learned some tough land investment lessons in the past decade!).
Category Archives: Cross River NY
NY housing market posts strong third quarter | Katonah NY Real Estate
The New York state housing market posted its fifth consecutive quarter of year-over-year home sales gains in the third quarter. The 3Q statewide median sales price increased by 4.4% and the number of pending sales grew for its fifth consecutive quarter, according to the New York State Association of Realtors.
NYSAR CEO Duncan Mackenzie said year-to-date home sales are up 6.2% and pending sales are up 15% compared to the year-ago period. The year-to-date median sales price of $215,000 is unchanged from a year ago.
“As we enter the final quarter of the year, New York state’s housing market continues to move in a positive direction as closed and pending sales continue to increase compared to a year ago,” he said. “While we have a seasonal market in our state, which tends to slow down in the fall and winter months, we are positioned to exceed the 2011 closed sales total and project that we will do so.”
Click the image below to see the full report.
The state reported 27,203 closed sales in 3Q, up 4.6% from the year-ago period. The year-to-date closed sales reached 69,144, an increase of 6.2% from the same period last year.
“There are many positives in the 2012 housing market for buyers who are seeking to move into their new home before the end of the year including all-time low mortgage rates, which were driven even lower by the Fed’s recent mortgage purchases,” said MacKenzie. “Sellers also continue to see improvements as they received nearly 95% of their list price in the third quarter, aided by shrinking inventory levels.”
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Videos That Will Keep You Sane and Entertained During the Election | Katonah Homes for Sale
It’s no surprise when you take a look at “what’s trending” on YouTube, you see a host of election videos, usually something a candidate said that was either candidacy-killing or somehow awe inspiring. Everybody has their agenda when it comes to posting these videos. But you know, the election inspires many creators to come out with videos making fun of both candidates. Or, maybe I can learn something about the election that I didn’t know before. Here are a handful of videos that are informative and/or entertaining.
From Epic Rap Battles to CGP Grey: Something For Everyone
Let’s allow CGP Grey to give us a lesson on what happens if the election were to end in an electoral tie:
Bad Lip Reading recently posted this hilariously ridiculous take on the first Presidential debate, called “Eye of the Sparrow:”
Alphacat, who has been leveraging Obama and his excellent impersonation of him all year, including my favorite in which he has Obama sing a “99 Problems” cover:
Let’s go straight back to CGP Grey now, who explains how the Electoral College works:
Don’t worry, though, Grey explains there’s plenty of problems with that system:
Epic Rap Battles pitted the two candidates together in their usual, witty style, and teaming with the aforementioned Alphacat:
How about something real? Mitt Romney’s funny speech at the Al Smith dinner (with Obama on the dais) was uploaded by several YouTubers and all of them have been watched a few hundred thousand times combined so far:
You might as well hear the Town Hall debate “songified” by Schmoyoho, or as you’ll be calling it later, “Who’s Gonna Work It Out?”:
Anyway, hopefully these videos will brighten up your day. They did mine.
Home Warranties Take Some of the Worry out of Home Buying | Chappaqua Homes fo Sale
If you buy a silk blouse and the sleeve falls off after just one wearing, you’re likely to get your money back — or at least an exchange — from the retailer who sold it.
If you buy a house and the furnace stops working two weeks after you move in, you’re out of luck — unless you purchased or received a home warranty.
Two products — the home warranty and the builder warranty — can take some of the worry out of buying or selling a home. These warranties typically insure appliances and major systems in a home, whether it’s new or just new to you.
Builder warranties
Most builder warranties cover a new home’s materials and workmanship for one to two years, with coverage that lasts up to 10 years on major structural elements.
Rules vary from state to state, but generally these warranties only apply to the sale of a new home from the person or company that constructed it, to a new owner-occupant. Your state attorney general’s office can help you determine whether your builder is offering all the warranties required by state law.
Home warranties
A homeowner who gets a builder warranty with the purchase of his new home may also opt to add another layer of coverage by purchasing a home warranty. Additionally, home warranties can provide protection for those buying older homes. Home warranties generally cannot be purchased for mixed-use properties or mobile homes.
A basic one-year warranty can cost as little as $200 and will generally cover plumbing, heating and some appliances. The price of a warranty will increase as additional items and coverages — such as a swimming pool, washing machine or garage door opener — are added.
Home warranties may be purchased by sellers, who often add them to their closing costs, but they may also be purchased by buyers. Some real estate agents will give buyers a home warranty as a gift at closing.
Home warranties are not the same as homeowners insurance. Insurance protects against perils including fire, hail, property crimes and certain types of water damage. A home warranty does not cover these perils but, rather, covers specific components of the home.
A home warranty is a contract between a homeowner and a home warranty company that provides for discounted repair and replacement service on named items. When something that is covered by a home warranty breaks down, the homeowner calls the home warranty company, which dispatches one of its contracted service providers to examine the problem. If the necessary repair or replacement is covered by the warranty, the homeowner only pays a small service fee (in addition to the money already spent to purchase the warranty), and the service provider completes the work.
If you’re thinking about purchasing a home warranty, do your homework. Shop around for the coverage and pricing that best fits your needs. Ask the warranty company:
- What is covered?
- What is excluded from coverage?
- When does coverage begin? Some companies provide coverage on closing day, while others don’t take effect for two weeks to a month.
- How long does coverage last?
- What is the claim-filing process?
- Is there a cost to file a claim?
Knowing your warranty options and doing your research ahead of time can provide peace of mind when moving into your new home.
Tenant fights fee for removing shabby carpet | Cross River Real Estate
Q: I moved into my apartment eight years ago. At the time, the carpeting was in pretty bad shape with spots that wouldn’t clean or would come back after cleaning. By no means was it remotely “new,” as it appears it was the original carpeting installed when the building was built about 12 years ago.
After about five years of my tenancy, the carpet was lifeless, matted and fraying at the seams. There were issues on the stairs that were unsafe. The landlord was pretty dismissive of all repair projects, so I decided to remove the carpet and paint the floors.
Then recently, out of the blue, my landlord had an “annual inspection” for the first time in eight years and he noted the carpet was gone. He said I’ve cost him $800 and I would have to pay for replacing the carpet when I moved out. My contention is I saved him a lot of money by removing it at my cost!
I think I am a pretty good tenant, but you should know that I have been late with rent in the past. But I have a payment plan in place and am repaying back rent.
My concern is that he is charging me money to replace the carpet. I don’t think I should have to. He would have had to replace this carpet if I ever moved out.
Also, the dishwasher broke a while back and when I asked him to fix it, he said, “When you repay back rent, I’ll do something about it.” This was one of the amenities of the rental and now I don’t have use of it. Shouldn’t he have to fix it or lower the rent?
A: You have several issues here. First, the carpet does have a reasonable life and 10-12 years would certainly be about the most anyone could expect out of a typical apartment-grade carpet even with modest use and the best care. So I think your landlord needs to back off on the demand for the full replacement value of the carpet.
You correctly point out that the old carpet and pad would have to be removed and replaced before renting to a new tenant, and while the fact that you have already removed the carpet won’t likely save your landlord any money, it certainly won’t cost him much. In other words, the removal savings are offset by the fact that new tack strip will have to be installed.
The issue with the dishwasher not working and your landlord refusing to fix it or replace it until you pay the full back rent is a concern. You are correct again that the dishwasher was a feature or amenity of the rental unit when you moved in and the landlord needs to have someone out to look at it and either repair or replace it.
Q: You recently responded to a question about a roommate situation in which one of the roommates simply left over the weekend and the remaining roommate was stuck paying the full amount of the rent until he could find a new roommate that the landlord would approve.
This happened to me when my ex-girlfriend abandoned me and the lease, refusing to pay her half of the rent. I paid my half to the landlord to keep in good graces with him, but that is all I can afford. The landlord seems to be on my side, so my question is this: Can the landlord go after my ex instead of me for the defaulted balance, costs, etc., associated with her abandoning the lease?
I ask because I understand the landlord is entitled to and will get the unpaid or lost rent as well as damages to re-rent the property due to this breach of contract. I understand he can go after me or my security deposit if he wants. However, if the landlord wishes to just pursue the “guilty” party, is it possible for him to sue and collect from that party alone in any way?
A: As you seem to clearly understand, you and your roommate are “joint and severally”
responsible for the full amount of the lease as well as all of the other terms such as damage. This legal language essentially means that you are both (joint) and individually (think of severe as in separately) obligated for all the legal and financial aspects of your lease.
Yes, your landlord could choose to understand your situation in which your roommate suddenly abandoned the rental unit and left you responsible for the full amount of the rent. He could decide that you are not responsible for the “other half” of the rent. There is no legal restriction other than a landlord needs to be cognizant of fair housing laws and not allow some tenants grace while punishing others.
However, in my 30-plus years of experience, not too many landlords are willing to agree that a roommate paying “his half” is not obligated for the full rental value. Most landlords have mortgages and need the full rental income to cover their ownership and operating expenses. So, if your landlord is willing to make an exception for you, I’d say you are a very lucky person and have a great landlord.
via inman.com
Real Estate Branding; Establishing, Maximizing and Monitoring Your Brand Online | Chappaqua NY Real Estate
Mixed Home Sales Data Extends Stock Slump; Builders Rise | Cross River Realtor
Existing home sales fell by 1.7% in September to an adjusted annual rate of 4.75 million, just below analysts’ expectations for 4.8 million, according to the National Association of Realtors. But inventory fell by 3.3% to 2.3 million homes, or about 5.9 months worth of supply. It was the first time that inventory fell below 6 months of supply since March 2006, and the decline could put more upward pressure on housing prices. Prices in September were up 11.3% year over year.
“The shrinkage in housing supply is supporting ongoing price growth, a pattern that could accelerate unless home builders robustly ramp up production,” NAR Chief Economist Lawrence Yun said.
That news may be why homebuilders are on the rise after the report, even though the broader market has extended its slump. The Dow was recently off about 110 points.
KB Home (KBH) rose 2.3%; DR Horton (DHI) and Lennar (LEN) were up 1%.
“Despite occasional month-to-month setbacks, we’re experiencing a genuine recovery,” Yun said. “More people are attempting to buy homes than are able to qualify for mortgages, and recent price increases are not deterring buyer interest. Rather, inventory shortages are limiting sales, notably in parts of the West.”














