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How do you justify the cost of lakefront property?
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How do you justify the cost of lakefront property?
I just got an opportunity to purchase a lakefront trailer (mobile home) from a very old couple that recently died. The property is offered by the estate and the estate executor has put a price on this property of $17K.
The actual trailer is valued at maybe $5K as it is a 1984 with no A/C and very little of anything else. The lot rent is $425 a month which includes sewer and trash collection but nothing else...and it's seasonal up to October 15th with no water connected after October 15th.
I know if I call the bank and ask for a short term loan they are going to laugh at me when I tell them the trailer is the collateral. I don't need any collateral but I'm questioning if this is a good purchase or not. If I want to buy a summer home like this will I EVER get my moneys worth? I've seen trailers in this area go for $100K and more just because of where they are. This trailer is located at the very back of the trailer park and I can't see any possible way it could ever be removed so I guess it's considered a permanent mobile.home.trailer.
I want to buy the trailer because it's VERY close to my boat and it's lakefront...but what is a good price?
RE: How do you justify the cost of lakefront property?
Are there any other trailers for sale in the park? If so how much are they going for? You might be able to try calling a realtor and ask them what it might go for. How far is it from your home now? (commute) I'm guessing it's on Erie? Not too far from Perrysburg. Wife has relatives in Perrysburg.
Re: How do you justify the cost of lakefront property?
17k to be on the water doesn't sound to shabby at all.......as far a justifying it, well, you wake up in the morning and look out and see the boat on the dock, drink a cup or 12 of coffee with the dew on the ground. The only sound is that of the ocational bass boat screaming up the lake at an insane speed, a few birds, and some fish jumping........yeah, I'd say it's worth it.
Re: How do you justify the cost of lakefront property?
If it don't make your wallet to tight, go for it. Sounds like one of those things, if you don't, you'll be wishing you had of a few years down the road.
Re: How do you justify the cost of lakefront property?
What is the cost of any luxury?
How does it compare to other properties on the lake?
In the last 5 years prices have tripled and quadrupled here on the Eastern Shore. Waterfront lots that sat around 5 years ago priced at 15K have recently sold like crazy for 45....... Farm land that was 2000 an acre is 10 or more......
Re: How do you justify the cost of lakefront property?
Basically it sounds like you'd be buying the option to rent the land the trailer is on for $12K. Plus, you are going to pay $5100 per year to rent the land. That is if you have to pay the lot rent after Oct 15th. If you do, then basically you are going to be renting that land for 6 months a year at $850 a year. What happens when the owner of the park gets an offer of $3mil so some developer can build a luxury development on it? You would then have to pay someone to move your $5K trailer somewhere else. To me, it sounds pretty steep for something you don't really own. But then that's just my opinion.
Re: How do you justify the cost of lakefront property?
Neckbone brought up a good point - how is the land owned? Is this an association in which you become 1/xth of a land owner with voting rights and pay rent to only cover taxes/maintenance, etc., or is the land owned outright by someone/some entity and you pay rent?
If it is the latter, you may be forced to move if a developer buys the whole park. Developers love trailer parks on the water - infrastructure in place, approvals easier to obtain, utilities already run, minimum area requirements already determined, town/city/county has already accepted the area as residential, Coastal resources (aka tree huggers) do not have a leg to stand on against you, zoning/planning boards are easier to deal with, and the list goes on.
Ont he other hand, developers HATE land owner associations - voting rights and way too many sentimental families to deal with.
Yes, I am writing from experience.
The land ownership structure would weigh heavily in my decision.
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Move along, nothing to see here.
RE: How do you justify the cost of lakefront property?
RussH
Some good points have already been raised. The fact is you are getting waterfront at a far less price than you could purchase it. The downside is that you won't get the appreciation that you would if you owned it. A bank won't have any problem loaning you 80% to buy a piece of waterfront property. If you could swing it, I would put $17,000 down and finance the rest of a $100,000 piece of property. That way when it's worth $ 200,000 five years from now the appreciation will be yours and not the trailer park owners. If you do decide to go for this lot, see if you can lock in the lease for a number of years. If not, as mentioned before, you are paying a $12,000 premium for the ability to rent that lot. If the lease period is locked in for 20 years, that's only $600 a year. If they kick you out next year, that's $12,000 a year, and you've got nothing to show for it.
Good luck either way,
Doug
Re: How do you justify the cost of lakefront property?
there's waterfront on the upper end of murray for that, but it's on the rivers at the upper end. I actually know of a nicely finished double wide on the water (with a nice dock) for sale for 125k. Only problem is it is next to a pretty trashy camp ground, but the way I see it is that the days are very numbered for this establishment with the increasing property taxes and increasing land values, I would give it about 5 years max before it is cleared for more upscale houses, which would easily put the value of the double wide well over the 150k mark.
Re: How do you justify the cost of lakefront property?
Real estate values vary so much regionally it's hard to comment on price, so far as it concerns investment value. Certainly, they're not making any more waterfront property, so in the long run, it's only going up.
Also, $17,000 is very cheap for waterfront property on face value. Here in eastern Massachusetts, any buildable lot (forget waterfront) is going for $250,000+.
Having said that - real estate prices in your area are obviously a lot lower. Try to project forward - how is economy moving in your area (compared to nationwide)? A robust job market creates housing demand and raises prices, and problems in the job market can cause flat pricing or even decline. How is that trailer park looking? Is it well managed? Can you see it looking the same or better 10-20 years from now, or declining in conditions/value? It's hard to predict the future, but try to ask as many relevant questions as you can and go with your best judgement.
Another way of looking at this is to throw out the idea of it being a great investment, and to consider it to be a depreciating asset that you will extract value from (like the boat ;-)). If you will get a lot of use and enjoyment from the property, then it may not matter so much whether it appreciates, so long as you can afford to lay out the $17,000.
Re: How do you justify the cost of lakefront property?
For what it's worth, my wife and I bought into a lake subdivision in South Carolina in 1995. At that time, we bought two lake front lots for $17,500 each and subsequently combined the two and built our home on them. Last time I knew, two similar lots, that were combined were on the market fot $130,000, and we have more footage on the water. Depending on the circumstances, water front property is nearly always a very good, appreceiating investment.....do your home work well
RE: How do you justify the cost of lakefront property?
Quote:
RussH - 10/24/2005 10:02 PM
I just got an opportunity to purchase a lakefront trailer (mobile home) from a very old couple that recently died. The property is offered by the estate and the estate executor has put a price on this property of $17K.
The actual trailer is valued at maybe $5K as it is a 1984 with no A/C and very little of anything else. The lot rent is $425 a month which includes sewer and trash collection but nothing else...and it's seasonal up to October 15th with no water connected after October 15th.
Russ
Russ,
The concern is on the leased land. Personally I would walk, trailer/mobile homes depreciate like cars. If your perceived or real value for the trailer is $5000 than that's what it is worth to YOU unless the leased land has value and the lease is for 100 years. Not understanding your area, the lease and land values this is hard for someone to advise on. Out in Hudson,Fl were trailers are plentiful, the fact that double wides are allowed in many areas tends to hold down property values. However with the shortage of land in my area people are still buying in these area but it called settling.
If you need to finance/mortgage or get a personal loan you should or may be required to purchase insurance. Where I sell real estate a 1985 mobile home would be next to impossible to insure. If you do find a carrier the cost would be retarded here, not sure about you area.
$450 seems like a lot of money depending on the terms of the land lease, I keep the Cat high and dry with first class service for under $350 per month!! I've dealt with Land Leases in Northern Maine and they were $600 a year to the moon on a nice riverfront property with a 50 year term.
Again the value of this investment lies in your eyes only! If you can afford this luxury or see the land lease increasing in value go for it. But keep in mind the longer you own the land lease the shorter the term becomes thus the value will decrease. IMO the trailer has little of no value, $5,000 down here is to much for a 1985 mobile home.
I have a buddy with a mobile home park up in Hudson and people are always offering him older trailers for free just to move them to make way for newer double wides or making way for new construction. Trailer parks are being sold for big bucks to make room for condos and nicer single family homes.
What is the chance of this happening in your area when the lease expires??
Re: How do you justify the cost of lakefront property?
i didn't read all the posts, but neckbone hit the nail on the head....what sort of lease comes with this purchase?.....let's say you go for it and get a new trailer.....the value of the trailer will decrease over time, it is an expense, not an investment
if the lease has a good clause in it that keeps you from getting tossed out no matter who owns the land as long as you pay the rent, and the landlord present or future can't jack the price up so high you can't afford it, and you plan on being there a while and are comfortable there, if you can easily afford the rent and it is worth it to you to be near the water....then go for it....maybe you will end up reducing or cutting out other vacations because you will be content where you are.....
but if you fork over the 12K for the right to rent land from somebody who can raise the rent or sell it from under you, i don't think you will be getting good value for your money...... it is not safe to assume you will get your money back if you decide to sell......if the landlord sells it to somebody who plans on building permanent housing, you will end up with nothing but a hole in your wallet
have a lawyer look at anything before you sign it
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Anyone who calls a spade a spade deserves to use one.
Re: How do you justify the cost of lakefront property?
darn, for 17,000 you cant even pay property taxes up here. We live on a lake, (Winnipesaukee). You cannot find a lot on Winni with a dock for under 300K, keep in mind this still needs to be cleared. For a lot up here with a house on it waterfront, you can get a housekeeping cottage with 50' of frontage for just over 350K. A trailer on this lake across the street from the actual lake is going for 84K with a really old trailer. For what your getting I would say its worth it. I dont know what the rate is down there but on a million dollar waterfront up here we pay 64,000 a year in taxes and other fees. Not to mention trying to get a breakwater and a boat house built is like trying to start your own military base. Its like almost impossible, took me three years and i dont even want to say how much money.
Re: How do you justify the cost of lakefront property?
What's it worth? Elwood.
Elwood is the Great Blue Heron that calls my pier home. He hunts fish through a hole in the JetDock. He pokes at grass shrimp in the shallows, and disturbs the school of white perch in the downed pine tree that harbors them.
He leaves his huge footprints in the shoreline mud at low tide.
He squawks when the kids disturb his regal day - 4 or 5 times as he gets those pterodactyl wings going across the creek.
In dollars, Elwood is really worth nothing. But he's worth a lot to us.
How do you justify the cost of lakefront property?
Thinking outside the box
