New investor in need of advice.

Real Estate Deal Analysis & Advice
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New investor in need of advice.

Elijah Williamson
New to Real Estate · Member since 2020 · 38 posts · 13 votes

I've been following BP for about a year now and have yet to do a deal. I live in rural Alberta, Canada. A few days ago I got a tip from a friend that someone in my small town of about 2,000 people that someone want's to sell her land. It has two mobile trailer homes on it currently, each paying $150 a month for land rental and room for 6 more trailers. She's asking $35,000 for these 2 acres.

My main issue is I wasn't planning on investing here as vacancy can sometimes be high and there aren't many renters around. Most houses here are up for sale for over 2 years here. My friend wants to go 50/50 on this deal and then buy trailers to move out here are rent. We worked out the cost and it's about $15,000-$20,000 a trailer. The other option is to sell the land instead. She's only asking $35,000 and my friend is convinced it's worth more then double that. My fear is even if it's worth $70,000-$80,000 I don't know if it will sell. Houses take 2 years to sell here. I'm really being pushed to make a decision as my partner wants to move quickly on this but can't do it without me. If I do this, I lose my down payment  for a potential rental house.

As someone with little to no real world experience in investing, is there something I'm not seeing here? Are my fears unfounded? Should I or should I not do this deal? What should I do to cover my bases and make the best decision? 

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  • Adam Vadnais
    Cold Lake, AB · Member since 2019 · 12 posts · 14 votes
    5y

    @Elijah Williamson

    I am also in a smaller Alberta community.

    Where exactly are you looking at? Based on your description alone I would pass on this deal but I would be happy to look at it in greater detail. PM me and we'll talk about it

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  • Zorya Belanger
    Rental Property Investor · Edmonton, Alberta · Member since 2015 · 307 posts · 200 votes
    5y

    My thoughts are that you need more information before making a decision. Do more due diligence. Is there a realtor you can talk to understand actual value of land and how long it might take to sell? I don't think your friend's hunch that its worth more is enough. Will you be able to rent out those additional trailers? Are there people moving to that town that will need a place to rent? From your description sounds like a poor rental market. I think I would only do it if I had another buyer lined up, and then act like a wholesaler, or do a sandwich closing, if those are still allowed.
    When just getting started, I wouldn't rush into anything too quickly. There are PLENTY of deals out there, make sure FOMO isn't driving you.

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  • Christopher H.
    Lender · Okanagan, BC · Member since 2017 · 105 posts · 77 votes
    5y

    @Elijah Williamson

    You said yourself that vacancy can be an issue. Are you wrong?  If you know that you are right then do not buy it with intentions of doing rentals.  That simple.  Vacancies can destroy an investment so quickly.

    Flipping the land for double would be fantastic.  Look up the land values surrounding that parcel of land.. what would they sell for?  have any similar pieces of land sold in the last year? Land values can be based off data not guessing.  Is your friend an experienced land or real estate investor in that area?  If he has a track record of success then its worth considering.  If not, you should seek out someone who does have the experience in that area to give you feedback.  

    Speculation and guessing are two different things.  

    I don't know enough of the details here to give you a %100 concrete yes or no, but based off what I can see I would be leaning heavily towards walk away.

    You only get to do so many deals so quickly.. make them count.  Be picky.  Like @Zorya Belanger said don't get the FOMO.

    "I wasn't planning on investing here"  The Real Estate gods are testing your discipline and patience.  Now its your move :) 

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  • Milo Milosovic
    Investor · Edmonton, Alberta · Member since 2018 · 47 posts · 22 votes
    5y

    @Zorya Belanger and @Christopher H. both have great insight for you regarding your position. It sounds like you may need to figure out some focus regarding your desired outcome and goals. Send me a PM and I’d be happy to chat with you and share some of my experiences. 

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  • Andrew CasalPro Member
    Homeowner · Pawtucket, RI · Member since 2020 · 61 posts · 13 votes
    5y

    @Elijah Williamson I think you need to first look at what strategy you want utilize. A lot of people starting out, including myself try/want to do everything and it bogs them down.

    I would figure out what strategy you want to focus on and then based on that see if this opportunity fits with that or not.

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