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I've first posted this on the realestate investing board, but now that I think about it, this is a better place. So, please excuse the cross-post:

DW and I met in graduate school in Austin, Texas. We moved to South Florida last year, and plan to be here for the next 10 years or so. We're still young (me 27 and her 25). But, we hope to be life-long wealth builders by making plans now.

We have a fantasy of retiring back in Texas, and the Austin area. We're big UT fans, and want to get season tickets to football and basketball and go to every game!

There is a region developing west of Austin, with lots of undeveloped land parcels (.25 to .5 acres for $2000 to $5000).

What considerations should we make if we were to look at this scenario as a long-term investment and retirement goal? Obviously there would be the acqusition costs, taxes, etc. But, could we keep a parcel of land undeveloped for 15 years? We obviously could sell the parcel down the road if our plans changed, and it was still desireable. Could we be forced to develop it or sell it as the rest of the community grows?

Thanks again,

R.H.
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We have a fantasy of retiring back in Texas, and the Austin area. We're big UT fans, and want to get season tickets to football and basketball and go to every game!

Hook 'em!


What considerations should we make if we were to look at this scenario as a long-term investment and retirement goal?

Well, one consideration is that in 10 years you may not feel like you want to go to every UT game. You're still young enough that you'll experience a LOT of change in the next 10 years in your priorities. And you may fall in love with Florida.

Real estate taxes in Texas tend to be high. Every state has to get income from somewhere, so without income tax, you've got RE and sales taxes. Make sure you have a feel for what the RE taxes are going to be each year.


But, could we keep a parcel of land undeveloped for 15 years?

Depends upon what property rights have been lost in the process of the developer stamping a set of Restrictions on the Deed. Very often there is a time limit to build. Ask the realtor for a complete copy of the deed restrictions. If the realtor doesn't provide it or provides only a summary, the restrictions should be recorded at the courthouse. TX is not very good yet with the online deed information, last time I checked, so you may have to find another way to get them.


Could we be forced to develop it or sell it as the rest of the community grows?

Unless the deed has restrictions on it when you buy the property, there are only a couple of ways to be forced to sell. One is emminent domain, or whatever that government ripoff is. The other situation occurs when corrupt government officials conspire with big money people who want your land to raise the taxes to a point where you can no longer afford the property. If the parcel you want is part of a community that is being developed, these two ways are unlikely, so it will probably boil down to the deed restrictions.

If I were you, I'd have a chat with a real estate attorney in the Austin area who also invests in real estate himself and who is not associated with the development in any way before I purchased the property. It would be advice worth paying for.

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Ok, so an attorney would be the first person to talk to. How would you recommend finding one? I know the Austin Bar Association has attorneys they set you up with for only a $20 donation to the Bar. Should I start there?
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Ok, so an attorney would be the first person to talk to.

Before I talked to the attorney, I'd probably talk to the real estate agent or development company handling the property and try to get a copy of the Covenants and Restrictions, as well as any other information you can get. I probably wouldn't talk to an attorney until I'd done all the research and was ready to buy. At that point, an attorney would serve as a last check. If you check with the attorney first, then he can't give you very specific advice.


How would you recommend finding one? I know the Austin Bar Association has attorneys they set you up with for only a $20 donation to the Bar. Should I start there?

I probably would not start with the bar. You could start here:

http://martindale.com/xp/Martindale/home.xml

I'd find some candidates on martindale, then look at their websites, if they have any. Then I'd do some phone research with their secretaries. I'd be specifically looking for an attorney who does a fair amount of real estate investing himself.

The way people typically recommend that you find an attorney is to ask friends to recommend them. I find that most friends are not competent to judge lawyers very well. So I ask other professionals or lawyers I think are competent (in that city) that have some other specialty. For example, if you need a bankruptcy, estate, or tax attorney, ask an excellent accountant. If you have dealt with an attorney in the Austin area that you think is excellent, ask him to recommend a real estate attorney.

That's two ways to get started. Another way would be to talk to a seasoned real estate agent in Austin not associated with the development for the name of a lawyer they would recommend. They are mostly going to recommend the ones they use for closings, which is not really what you want. So again, I'd try to find a real estate agent who invests in real estate themselves.

I don't know if that helps, but maybe it's a place to start.


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There is a region developing west of Austin, with lots of undeveloped land parcels (.25 to .5 acres for $2000 to $5000).

What considerations should we make if we were to look at this scenario as a long-term investment and retirement goal?


I wouldn't recommend investing in an undeveloped lot. Real estate taxes are likely to eat up any appreciation you see. Keep your flexibility by investing that money into something that you can expect more return from, then you can buy a lot when you are ready to actually build there.

Real estate can make a great investment, but it's tough to make good money on non-income producing land. If you have a house you can rent, that's good, or if you have timber you can harvest, that's good. If it's just sitting there generating a tax bill every year, that's not so good.

Ben
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Real estate taxes are likely to eat up any appreciation you see. Keep your flexibility by investing that money into something that you can expect more return from, then you can buy a lot when you are ready to actually build there.

What you say is true. But you neglect to account for the fact that this may be the subdivision they really want to live in, and if he waits 10 years to buy a lot, it most likely will not be available in that location anymore. He'll have to buy elsewhere.


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It sounds as if you talking about the Lago Vista area, projected growth is high value in 10-20 years. Not exactly get rich soon much less quick. I have rental property there (my mom and step-dad occupy one of the units since they wanted to retire there). In general I find the Austin metro area to be a good investment real estate wise, although I live in the SouthEast Texas area. As a licensed Real Estate Broker in Texas, I would like to share a basic rule of thumb. Raw land is a bad investment... unless there is some form of income (Farm or Hunting lease fees, timber, etc.) There are many risks however to a parcel just sitting there. Taxes number one, a shift in growth pattern could leave your well intended investment in the dust (It happens), Governmental restrictions or enviromental regulation changes, zoning law changes, etc. Another very real one is: ADVERSE POSSESION, a situation of real property being legally "stolen". This usually happens to out of state owners. Either look it up or ask a Real Estate attorney what it could mean to you. I'm not an attorney, so by law I can't give legal advice as a broker. I think you would do much better investing "right under your feet" in Florida (Not exactly a slum state). This way you can keep an eye on your property and be informed of any potential changes that may increase value or adversely affect your holdings. Also, when it's time to come back to the promised land :) You won't have as much reservations of selling any real estate holdings you may have acquired in Florida.
Best of Luck,
Txbroker :)
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