Buying raw, undeveloped land as opposed to houses and apartments is a very different type of real estate purchase. There are several drawbacks and also some real advantages. In the long run, mortgage free land that has been used and enjoyed for decades can be a valuable part of one's retirement plan. It can be especially important for people who never did manage to get into the urban real estate market while needing a city job and then, at retirement age, finding the cabin on peaceful rural acres to be a mortgage free domicile to kick start retirement years.
The good news on buying raw land is that it's cheap. The bad news is that financing is more difficult to arrange. Although Canada is huge and mostly undeveloped and unpopulated, very little land in Canada, as a percentage of the overall land mass, is available for private ownership and land remains an expensive proposition for most. Raw, rural land is of course the cheapest, but one usually has to pay cash to get the very lowest price and that still entails many thousands of dollars.
So why would someone buy raw, rural land without the plan to inhabit it or develop it. Well one reason is to build equity. Once again, the problem of developing equity in raw land is that the banks don't like it as collateral to any large degree. Most banks will loan in excess of 75% of the value of developed property because if foreclosure is required, the property will produce cash flow from the rent. Raw land will likely only attract 20% of its value in the form of a loan. This means for example that if you buy your land....build lots of equity over the years and then approach the bank for a mortgage to build your house, you have to jump through a lot of hoops and still may not get all the money you want. But for people who don't need or want to build a house or those who want to build for themselves over time, land outside city zones can be a very satisfying way to own real estate.
The reason of course that raw, rural land is cheap is that most folks want to live in urban centers where jobs, services and entertainment are plentiful. In addition, despite the relatively low cost of raw, rural land, if one decides to buy such land, the cost of acquisition combined with the carrying costs may inhibit other savings and disposable income to the point where buying urban real estate, i.e. a place to live, may be impossible.
Despite all this negativity the idea warrants merit and I did it! Like many things that aren't mainstream it requires a need for a slightly alternative perspective on things. One of the best things about buying raw, rural real estate is that it's possible. Even po folks like ourselves can afford to buy land in Canada and maybe even some land with some desirability, such as waterfront, proximity to home, large tracts, merchantable timber, arability etc. Land is available in every province in Canada and in most provinces large acreages can be had for about $500 an acre. Yes! FIVE HUNDRED DOLLARS AN ACRE. So what about all these condos and suburban houses across the GWN that cost hundreds of thousands for just an old house on a little lot? Well there's a vast disparity in all kinds of Canadian real estate. This blog isn't for those who are shopping on Vancouver's west side nor for those looking at family houses in Fort McMurray and other high priced neighbourhoods. These ideas are for those who either dream of owning a place in the country or for those who see that as a way into the real estate market and who don't have the financial resources to carry a big mortgage or don't want to be saddled with one.
These low priced, rural lands have the potential for providing useability, building materials, equity building and maybe even a little cash flow...all good things for someone on a tight budget. Enjoying the privacy, the wide open spaces and flora and fauna of the countryside may be enough for many. For those desperate for some sort of ROI. There are a many different ways to take some money and materials out of your rural acreage. In most cases, you'll be doing well to get enough cash out of your land to pay the taxes if you don't actually work the land. Of course, hard working folks can do better.
It may be possible to rent arable land in whole or in part to a farmer. Simply accepting some of the crop as rent maybe a good way to fill your freezer and offset your city food bill.
If your land has merchantable timber, some of the acquisition cost could be offset by either logging it yourself or allowing a logging company to do it for you. Or if the timber is of lower quality the land may still be a good wood lot for firewood sales, heating your cabin or sawing timber for lumber yourself which can be air dried and sold by the board foot and/or used to build your cabin which can then be rented out to others.
By clearing the land as an improvement you might not only increase the value but also make other ways to develop cash flow. You could own your own blue berry patch, grape vines for your own wine or plant fruit trees for examples.
By planting walnut trees that develop valuable timber over decades and provide nuts in the meantime, while not demanding daily maintenance, your land could be quite affordable in the short term and very valuable in the long term.
Land that has poor growing soil but is in an area of livestock farms maybe a candidate for composting to improve the arability. Chicken, hog and other sale barns often have surplus manure that can be used for composting that will significantly improve the soil. So cheap land with poor soil becomes more valuable land with good soil over time. Good compost will be available from raw materials within a couple of years....a fairly short time to wait for great garden harvests.
These ways of using rural lands are well known to people who live in the country and can be used by city dwellers on weekends and vacations. Exchanging that trip to Mexico for a two week trip to rural Ontario for clearing bush and bucking firewood might not excite the kids too much but when the weekends later on are spent berry picking, or harvesting honey from your hives or tapping your maple trees for syrup and candy, perhaps the road less traveled can be rewarding....and profitable after all.
I bought my land firstly to enjoy the use of it and I also I expected to achieve long term equity growth. Both have occurred.
Lastly there is another reason that owning land is important......prestige, pride of ownership...you're the owner! Private property rights are almost impossible to extinguish in Canada. Once you own the land...you own it. You can use it and will it to your descendants who will then not have to work those long hours to make all those mortgage payments.
But with your land you will most likely own it outright within 5 to 10 years. You can farm it, rent it, build a cabin, camp on it, do projects that require space like wood and rock work, have storage space and a myriad of other uses.
Sometimes, land that seems remote can become less so over the years because of growth in the area, improved roads or other transportation links. Then, developments such as subdivision becomes a possibility.
Here's a great link because this a real estate company that provides uncomplicated financing for it's lands....all you have to do is make the payments and in five years you own it!
http://www.dignam.com/
Here's another good resource
http://www.niho.com/
Here's the most important link for shopping for land in Canada
http://www.realtor.ca/index.aspx
The first five years after acquisition is always the most difficult. After that, because of inflation the payments are smaller, the land is worth more, you're making more etc. So it seems daunting at first but I've never met anyone who regrets buying land.
Buying my land was a pivotal decision and remains one of the most important things I've ever done so I have no problem recommending it to friends. But like the buying of silver....almost no one does it. All you need is either a few thousand dollars or a bit of credit or both is nice of course. In some cases the seller may take payments in order to make the sale possible..... Then you could buy land like this for example.
http://www.realtor.ca/
or this
http://www.realtor.ca/
feeling adventurous? How about 155 acres for $20,000
http://www.realtor.ca/
The good news on buying raw land is that it's cheap. The bad news is that financing is more difficult to arrange. Although Canada is huge and mostly undeveloped and unpopulated, very little land in Canada, as a percentage of the overall land mass, is available for private ownership and land remains an expensive proposition for most. Raw, rural land is of course the cheapest, but one usually has to pay cash to get the very lowest price and that still entails many thousands of dollars.
So why would someone buy raw, rural land without the plan to inhabit it or develop it. Well one reason is to build equity. Once again, the problem of developing equity in raw land is that the banks don't like it as collateral to any large degree. Most banks will loan in excess of 75% of the value of developed property because if foreclosure is required, the property will produce cash flow from the rent. Raw land will likely only attract 20% of its value in the form of a loan. This means for example that if you buy your land....build lots of equity over the years and then approach the bank for a mortgage to build your house, you have to jump through a lot of hoops and still may not get all the money you want. But for people who don't need or want to build a house or those who want to build for themselves over time, land outside city zones can be a very satisfying way to own real estate.
The reason of course that raw, rural land is cheap is that most folks want to live in urban centers where jobs, services and entertainment are plentiful. In addition, despite the relatively low cost of raw, rural land, if one decides to buy such land, the cost of acquisition combined with the carrying costs may inhibit other savings and disposable income to the point where buying urban real estate, i.e. a place to live, may be impossible.
Despite all this negativity the idea warrants merit and I did it! Like many things that aren't mainstream it requires a need for a slightly alternative perspective on things. One of the best things about buying raw, rural real estate is that it's possible. Even po folks like ourselves can afford to buy land in Canada and maybe even some land with some desirability, such as waterfront, proximity to home, large tracts, merchantable timber, arability etc. Land is available in every province in Canada and in most provinces large acreages can be had for about $500 an acre. Yes! FIVE HUNDRED DOLLARS AN ACRE. So what about all these condos and suburban houses across the GWN that cost hundreds of thousands for just an old house on a little lot? Well there's a vast disparity in all kinds of Canadian real estate. This blog isn't for those who are shopping on Vancouver's west side nor for those looking at family houses in Fort McMurray and other high priced neighbourhoods. These ideas are for those who either dream of owning a place in the country or for those who see that as a way into the real estate market and who don't have the financial resources to carry a big mortgage or don't want to be saddled with one.
These low priced, rural lands have the potential for providing useability, building materials, equity building and maybe even a little cash flow...all good things for someone on a tight budget. Enjoying the privacy, the wide open spaces and flora and fauna of the countryside may be enough for many. For those desperate for some sort of ROI. There are a many different ways to take some money and materials out of your rural acreage. In most cases, you'll be doing well to get enough cash out of your land to pay the taxes if you don't actually work the land. Of course, hard working folks can do better.
It may be possible to rent arable land in whole or in part to a farmer. Simply accepting some of the crop as rent maybe a good way to fill your freezer and offset your city food bill.
If your land has merchantable timber, some of the acquisition cost could be offset by either logging it yourself or allowing a logging company to do it for you. Or if the timber is of lower quality the land may still be a good wood lot for firewood sales, heating your cabin or sawing timber for lumber yourself which can be air dried and sold by the board foot and/or used to build your cabin which can then be rented out to others.
By clearing the land as an improvement you might not only increase the value but also make other ways to develop cash flow. You could own your own blue berry patch, grape vines for your own wine or plant fruit trees for examples.
By planting walnut trees that develop valuable timber over decades and provide nuts in the meantime, while not demanding daily maintenance, your land could be quite affordable in the short term and very valuable in the long term.
Land that has poor growing soil but is in an area of livestock farms maybe a candidate for composting to improve the arability. Chicken, hog and other sale barns often have surplus manure that can be used for composting that will significantly improve the soil. So cheap land with poor soil becomes more valuable land with good soil over time. Good compost will be available from raw materials within a couple of years....a fairly short time to wait for great garden harvests.
These ways of using rural lands are well known to people who live in the country and can be used by city dwellers on weekends and vacations. Exchanging that trip to Mexico for a two week trip to rural Ontario for clearing bush and bucking firewood might not excite the kids too much but when the weekends later on are spent berry picking, or harvesting honey from your hives or tapping your maple trees for syrup and candy, perhaps the road less traveled can be rewarding....and profitable after all.
I bought my land firstly to enjoy the use of it and I also I expected to achieve long term equity growth. Both have occurred.
Lastly there is another reason that owning land is important......prestige, pride of ownership...you're the owner! Private property rights are almost impossible to extinguish in Canada. Once you own the land...you own it. You can use it and will it to your descendants who will then not have to work those long hours to make all those mortgage payments.
But with your land you will most likely own it outright within 5 to 10 years. You can farm it, rent it, build a cabin, camp on it, do projects that require space like wood and rock work, have storage space and a myriad of other uses.
Sometimes, land that seems remote can become less so over the years because of growth in the area, improved roads or other transportation links. Then, developments such as subdivision becomes a possibility.
Here's a great link because this a real estate company that provides uncomplicated financing for it's lands....all you have to do is make the payments and in five years you own it!
http://www.dignam.com/
Here's another good resource
http://www.niho.com/
Here's the most important link for shopping for land in Canada
http://www.realtor.ca/index.aspx
The first five years after acquisition is always the most difficult. After that, because of inflation the payments are smaller, the land is worth more, you're making more etc. So it seems daunting at first but I've never met anyone who regrets buying land.
Buying my land was a pivotal decision and remains one of the most important things I've ever done so I have no problem recommending it to friends. But like the buying of silver....almost no one does it. All you need is either a few thousand dollars or a bit of credit or both is nice of course. In some cases the seller may take payments in order to make the sale possible..... Then you could buy land like this for example.
http://www.realtor.ca/
or this
http://www.realtor.ca/
feeling adventurous? How about 155 acres for $20,000
http://www.realtor.ca/
