RE: How to Land Your First Real Estate Deal - Part 1
Thanks for the feedback. I feel like improving land is vastly more speculative. In the beginning of the project , there is a lot of cash outflow just trying to get the blueprints, the permits, the local fees, and environmental surveys required - material costs can change like what happened with recent hurricane where all building materials prices increased dramatically. All of this with only the hopes that someone will buy the property when completed - assuming you didn't go over budget on the project and have to sell it for a loss - also, your money will be tied up for several months doing something like this.
Rehabbing a house - especially in an area where houses are in strong demand is almost a no-brainer. As long as you understand the value of remodeled homes in the area and buy at the right price - it's not nearly as speculative as building from the ground up. At least with home already built, you can get an idea of what you can resell for in a couple of months -you can spend hundreds of thousands of dollars developing blank land just to have the market turn around on you and be stuck holding the bag.
If you improve the land, you're creating employment (because someone has to build the improvements) and raise the value of the surrounding land (for example, building a subway station will make neighbouring properties more valuable). Instead of being speculative, you're being productive.
If you're not improving the land and relying on capital gains, then you're speculating.
All I'm saying is that my preference is for employment, better infrastructure and better use of land (no more vacant plots in cities where the owner is just waiting for the price to go up).
I agree with you - especially if you are talking about projects like subway stations, in terms of providing more economic benefits and greater productivity - but it is still highly speculative. They have been working on building high-speed rail where I live for over ten years now and so far it been nothing but a money pit with very little if any progress - most residents here don't even believe it's ever going to get finished and roll their eyes when the subject comes up.
However, when I first got to Fresno, the north part of town was undeveloped and they started building malls and restaurants there and now it is the most prominent shopping area in Fresno, creating lots of jobs and revenue.