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9/22/2017 12:11:25 AM
Posted: 12/20/2005 5:37:28 AM EDT
Hi guys,
I've been mulling this over for some time and haven't really come to any conclusion. Here's the deal: my parents are divorced. When my mom's mom passed away in the early 90's, mom got her farm. It's about 90 acres in southeast Missouri. Very rural, ~2 hours from St Louis. The property itself is a large hill in back with timber on it. The front half is fields. There is an early 1900's house, two similarly old barns, a creek running between the house and barns, and IIRC, a spring that feeds the creek.
She also owns a 40 acre farm that she lives on. House was built in '72 along with 2 barns, one large pond and 2 small, connected ponds.
Mom has offered to sell me "grandma's place" at a very cheap price, $50-60k(she might go lower on this, I'd have to get the place appraised before I agreed to a price). Her thinking is that she could use that money to pay off her all her debt (credit card and maybe a car loan). That's not the whole deal though. She is planning ahead and intends to leave my brother and I some inheritance. My brother has indicated that he would rather have the 40 acre place. (just so you don't think we're vultures, mom actually initiated this whole dialog) So, I'm thinking that we would have the farms appraised, then if I bought the place, my inheritance would be adjusted by whatever the difference was between what I paid and the appraised value...or something like that. Basically, I get the place cheap now, but it comes out even in the end because my inheritance will be reduced by some amount.

So, non-financial reasons I would like to buy the place are: it's a decent hunting property, it's been in the family a long time, that area of Missouri is great for hunting and fishing - public land everywhere.

Financial considerations: let's assume that I could swing a payment on it, she has been renting the fields for about $1200 per year, she has been renting the house for maybe $250/month, maybe less, but has had trouble with renters. Her most recent ones moved out and left the place absolutely filthy.

Non-financial reason to not buy the place: it's in Missouri, I'm in Indiana - 7 hours away. I don't want to be a landlord. The wife says we don't have to rent the house, but that seems like a missed opportunity, plus it seems like if a place just sits, it'll go downhill. I.e. no one knows if the roof is leaking or a pipe burst.

So, what should I do? I'd really like to own land in Indiana, close to home, for hunting/shooting. The cheapest I've found land for here is $1250/acre, and it's over an hour away from me.
Thanks for any suggestions,
Jim
Link Posted: 12/20/2005 8:40:54 PM EDT
if you want it and can afford it, get it, and skip the renters. for the paltry rental income they would provide, they aren't worth the headaches. Just shut the water off, drain the pipes and check in on it every month or so. if it becomes a headache, sell it. do not purchase it for more than you know you could sell it for.
Link Posted: 12/23/2005 1:50:00 AM EDT
Forget renting the house unless: (1) you can find someone reliable that you can trust to keep an eye on the place in which case don't plan to make any real money on the rent
or (2) you are willing to write off the buildings - unless you can keep an eye on the property, it is liable to go downhill fast.

The problem with an un occupied home is that it attracts squatters and vandals.

As to the ground, you say that part of it is in fields. Look into cash rent. There is certainly someone in the area that is farming a thousand acres or so that is looking to expand his operation. I don't know what the rate is in that area, but what ever you can get out of it would be to your advantage. Don't consider "on the shares".

Link Posted: 12/28/2005 12:07:45 PM EDT
Don't forget to take taxes into account!

If you purchase the land from your mom for less than its appraised value, you may have to declare the difference as a "gift" and pay gift tax to the IRS.

Also, if/when you sell the land, you'll pay capital gains taxes unless its been your primary residence for two of the last five years. Your "basis" will be the purchase price, not the appraised value when you bought it, so prepare to cut another big check to the feds.

Your mom needs to talk to a good estate planner.
Link Posted: 1/5/2006 9:53:24 AM EDT
Buy it, land is always worthwhile, they ain't making any more
don't rent the house, no point for such minimal money. Pay a neighbor to watch teh place for you, keep it up, less likely to be squatted.
Rent the fields (cheaply) to the same neighbor.

Land is always worthwhile.

Brian
Link Posted: 1/12/2006 12:09:30 PM EDT
"If you purchase the land from your mom for less than its appraised value, you may have to declare the difference as a "gift" and pay gift tax to the IRS."

No. The gift comes off the limit for inheritance.
Link Posted: 1/12/2006 12:20:39 PM EDT
if Land value down there does what it is doing here in SD(tripled in the last 10 years) buy it. Even with no intentions of selling it your rent will go up. Also you can split the profit of a rental company to rent the house and they will keep it up for you and watch it if noone around wants to take on the hassle.
Link Posted: 1/17/2006 10:31:40 AM EDT
If the timber is good, buy the property. I am a forester in New York and land owners are always supprised by what I will offer them for thier timber. I don't know how many acres of timber you have, but you might even be able to pay it all off with one harvest. If you hire a good forester that knows sustainable forestry you can log it every five years or so and make some good money.
Link Posted: 1/19/2006 7:31:39 AM EDT
Part of it was timbered maybe 10 years ago by my asshat uncle. There's still quite a few mature trees but I'd hate to take much timber off it.
Link Posted: 1/24/2006 6:42:12 AM EDT
Help your Mom out. Buy the property. Make sure you check on it regularly.
Link Posted: 1/24/2006 9:56:22 AM EDT
6.5 hour drive and checking on it regularly don't go together that well.


Originally Posted By Q3131A:
Help your Mom out. Buy the property. Make sure you check on it regularly.

Link Posted: 1/24/2006 2:50:50 PM EDT

Originally Posted By JimTh:
6.5 hour drive and checking on it regularly don't go together that well.


Originally Posted By Q3131A:
Help your Mom out. Buy the property. Make sure you check on it regularly.




If you rent the fields, add a condition that the farmer call you if he sees anyone on the property. Old renters come back or squatters move in.
Link Posted: 2/4/2006 5:23:33 AM EDT

Originally Posted By JimTh:
Part of it was timbered maybe 10 years ago by my asshat uncle. There's still quite a few mature trees but I'd hate to take much timber off it.



If you choose your "forester/logger" wisely you may be able to mitigate the effect on the land. You will be supprised what one tree is worth. I'd "pick & choose" what trees are harvested and be sure to replant with some larger more mature, fast growing "seedlings," as well as the standard seedlings. Not sure about the science of this, but it would seem that if you planted some 6-?ft trees, the cost might be justified over planting just tiny seedlings. After all, "time is money." I would also plant blackberry brambles(dual purpose, food source and natural hedge) As far as a "renter" choose carefully, My GF's son "rent's" his place to an uncle & aunt for the cost of the repairs, upkeep, and taxes. It's a win/win situation for both since he's in the Marine Corps. Just a few thoughts.....
Good Luck!
H1
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