Sell and double my money or hold!? Help!

[Ethan West]

I bought a 40 acre farm property 3 minutes from town last July for $367k. I have put $275k into improvements. 

I’ve had several brokers out last week and all of them have given me comp reports in the $1.2m to $1.3m range. 

There is a Costco, Fred Meyer, other stores being built down the street this next year. A hwy frontage road is also being discussed. There is really no property especially this size around. 

I’m confused if I should sell and double my money. Or if I should hold and slowly keep improving I.e. build a house. I feel like it’s sell now or plan on holding for 7-10 years?

[Jay Hinrichs]

Originally posted by @Anna Laud:

@Ethan West

Hi Sterling! 

It sounds like you've had some pretty amazing appreciation here and I can see why you're thinking of selling right now. There are a few things to consider here maybe; 

no.1 You've had some professional input on market value - if you've had more than one agent give you numbers that average out like this, odds are they are pretty accurate. 

no.2 Interest rates remain low right now, it's (in a lot of places) it's a seller's market and the kind of appreciation you're seeing in numbers indicate to me you're not in a flat market, but a more reactive one- good for now in your position but down the line is not a guarantee

no.3 If you're thinking about building a house here, I would be very certain the market could carry it- meaning if you're banking on the small pool of buyers that could afford the value now, plus a home (if interest rates remain lower and we are still talking about being well over $1M in market value)- is this something that your area can easily absorb or is there just a large pool of buyers that can drop or be approved for $1.5M+ in your area (I'm just adding in a value of what you said now plus an average home maybe). If you're looking at less of a buyer pool, you might be outpricing yourself for the market. You're already on the high end of things maybe in price point , and it's usually easier to unload the worst house in the neighborhood than the nicest one kind of logic- even if you're not in an actual neighborhood. 

no.4 The waiting game- if other more commercial properties are being built in the area - again a toss up in what this does to your value- could increase the value of the property, but could also take away (for those looking for that more out of town feel) or you could be looking at being bought out all together by a commercial development as they look to re-zone. I've worked with two sellers that were bought out by Meijer here in Indy and they were able to walk away with three times what the market value of the properties would have been to sell to end users. Is this a guarantee though? Not at all.

no.5 To quote Will Rogers and Mark Twain however "Buy land, they aren't making anymore of it" or versions thereof - land is one of those more buy and hold things usually unless you have subdivision development  in mind, rezoning etc. Now you could get into more of a cash cropping scenario and think of this more as a generation wealth building tool, if you were to add more farm ground to it. At that point you'd need to get into education process about crops, see if you can swing something to get in on anything that would be more beneficial financially like a USDA tobacco base etc (that's just a girl from a farming family talking who does this personally) or something like wind turbines. I would explore all options with the ground before going the house building route if I could add more acreage if I were keeping it personally. 

no.6 What would you do with these funds/profits? Meaning what's the plan (REI?) to see the highest return from them- if you sold now, you could possibly make a few other savvy REI moves and stand to come out even further ahead.

Overall, you've seen some great appreciation it seems and it seems like (based on what you said) that you're looking at making a decent portion in profit by selling now. Will that hold out? I'm not sure, but I would think that maybe you would be looking at some time beyond 7-10 years and for sure check out all other options (with the current land and adding more). Seems like you could be in a great position now to sell, a bit of a toss up if it will hold out that long(in the 7-10 year mark range and not need to go beyond that) and if building a home would outprice you from the rest of your market. 

Hope that helps some but obviously I'm not a market expert in your area like the pros you've already had out, only  offering professional and personal advice from Indy!

Oregon is a far different animal than most of the US and generic US advice does not apply in almost all instances. 

Bend has regional fame/desire ergo for a small 100k town pop or less  3 hours from any major city  the RE prices quite high compared to other parts of the country.. you have a big over flow from CA and other parts of the country for the so called quality of life living there. Not to mention many in the Portland metro area get tired of the constant cloud and rain and will retire over in that area.. 

As for future hold and value one needs to go into the county and look at long range planning  IE were are the urban growth boundaries and what is the designation.. Oregon zoning is hugely restrictive.. changes in 10 to 50 year increments.. U need long range zoning to be in your favor other wise the use could stay the same for decades and decades. 

Unless there is some major upside in zoning double your money and move on could be a hugely smart play with a 1031.  

If you need some developer insite I have a partner there that is currently building the big project in Redmond and lives in Bend and has a few other projects there he would be a quick one to check with on potential values..  

If the offer is from a company or an investment group then for sure you need further research on your future development potential.. if its from an owner to build a home. And then we all know that 40 acre new homes etc in this area will sell for 2 to 4 million to the right buyers . Its not like sticking a 1.5 million dollar home on the out skirts of Kokomo IN and hoping someone buys it.. LOL.. PS I like Kokomo have invested there for years.