land vs. interest income

[Michi]

If you could get $1,600,000 after taxes for a piece of ocean front property in Southern Baja California, Mexico that you paid $375,000 for four and a half years ago would you take it for it's interest income or would you keep the land hoping it would give more in the end? The economy and land values are based there on the USA economy and the upcoming retiring babyboomers.

Thanks for your input !

[Power-C]

Sell!

Well I would. The land possibly will appreciate more but I would assume you could find better investments for that money.

Just a question though.. Does Mexico have a 1031 like-type exchange law? If so, then you could easily move the money tax free into another property in mexico that would appreciate or give you cashflow.

[dosrotties]

Sell. If the value has jumped that much, it might be another 10 years for the next jump.

[Michi]

I would have about twenty home sites with this land. I could make also make money by building houses, but I am worried about the housing market - on one side there is a lull in the states in housing on the other hand seems like more baby boomers will be moving to Mexico instead of Florida.

[rejoice]

You're sitting on a goldmine... why sell?

[Young Spark]

Ah... the good old sell or hold question.

My opinion, I'd say try and extract some equity out of it. Use that equity to purchase another home that is sure to progress (i.e. purchase in a buyer's market... or if you have the knowledge, purchase in a seller's market as well.) When I say extract some equity (and maybe I'm cutting my own throat) --- but apply for a first mortgage with your one home as collateral --- in the end, all you have to lose is the property that you purchased if the payments are made (cause they'll foreclose on the purchased home, not the collateral home) --- or maybe I'm wrong, IDK, its 4:10am in the morning so I apologize if I'm wrong for this.

[ltressel]

Do not sell. If this land is really prime as you have described-interested parties can already be eyeballing it. Let them come to you with an offer you can't refuse.

Have you actually had a professional appraisal for this property or are you speculating? I would have it appraised professionally so you have a good idea of how much it's really worth. When your prospects give you an offer-you know what you got.


I hope this helps. I would be curious to know what your appraisal is whenever you get it.

LT

[bopa media]

Well considering "all else equal" I'd prob develop the land into a how or two depending on zoning and sub division laws and allowances. You can build a mcmansion for around 450-600 and sell the same house for atleast double. Figure you take out the equity on the property to buy the materials and pay the general contractor. Then sell the house for a cool 3 mill.

With current economic trends, it's a tough call. Hold onto it and the market could collapse but you could get a good rate to build a house on teh lot for yourself considering the slow growth rate in new construction and home improvement that was just released for the quarter. Personally i would dump it and use it as a deposit for a commercial NNN leased building and then wait to use that equity to build a nice collection