Need Advice

[sammyguy193]

OK- So here's my situation....

1) I'm currently a medical student, 26 years old.
2) I currently have, and will have, no debt
3) I have a large inheritance

I will eventually buy a large ranch-sized property in somewhere in the southern half of California to retire/summer at.

Question #1: Should I invest in one now, or wait?

I can't manage it, and have no plans to occupy it soon, so if I were to purchase it, i'd probably lease it to a cattle rancher, hunting club, or the like. The alternative is to invest it somewhat conservatively in some mixture of bonds, commodities, stocks, etc.

Question #2: If you suggest purchasing it now, how would you have that conversation with a parent?


Suggestions?

Thanks!!

[mcfroggin]

OK- So here's my situation....

1) I'm currently a medical student, 26 years old.
2) I currently have, and will have, no debt
3) I have a large inheritance

I will eventually buy a large ranch-sized property in somewhere in the southern half of California to retire/summer at.

Question #1: Should I invest in one now, or wait?

I can't manage it, and have no plans to occupy it soon, so if I were to purchase it, i'd probably lease it to a cattle rancher, hunting club, or the like. The alternative is to invest it somewhat conservatively in some mixture of bonds, commodities, stocks, etc.

Question #2: If you suggest purchasing it now, how would you have that conversation with a parent?


Suggestions?

Thanks!!

How bad are property taxes in CA? Prices are probably cheaper now, but you have 30+ years of taxes before you retire, right? What is the going rate for leasing land these days? Could you make a profit by leasing to ranchers?

If you can turn a modest profit by leasing, I would consider it. I would try to find someone to lease the land before even purchasing it though.

If you can't make a modest yearly profit over the mortgage/taxes, wait until later in life. All markets are cyclical. Housing will go up and down again.

[disneysteve]

1) I'm currently a medical student, 26 years old.
2) I currently have, and will have, no debt
3) I have a large inheritance

I will eventually buy a large ranch-sized property in somewhere in the southern half of California to retire/summer at.

Question #1: Should I invest in one now, or wait?

I can't manage it, and have no plans to occupy it soon, so if I were to purchase it, i'd probably lease it to a cattle rancher, hunting club, or the like. The alternative is to invest it somewhat conservatively in some mixture of bonds, commodities, stocks, etc.

Question #2: If you suggest purchasing it now, how would you have that conversation with a parent?

First off, welcome to the site. Your post raises a bunch of questions beyond just the ones you've asked. What is your current living situation? Do you own a home? If not, do you plan to soon? Are you single or married? If single, have you considered the possibility that a future spouse may not share your interest in vacationing or retiring on a ranch? For that matter, have you considered the possibility that at the age of 26, your own retirement plans may change over the next 40 years? Does it make sense to buy a property today that you may not use for decades? Or would you rather wait and buy a place that isn't 30-40 years old or more when the time comes to actually live there?

I'm not clear on your second question. If you want to buy a place now, how does that involve your parents?

Personally, I would vote against buying a place today to possibly use or retire to many years from now. Yes, the place may appreciate in value, but most likely, a well-diversified investment portfolio will appreciate at a much greater rate, leaving you in a better position in the future to buy your dream spot if you still want it. Plus that way you don't have your money locked up in a relatively non-liquid investment if it is needed for other purposes or your plans change.

[smoothsailingfs]

Personally, I would wait. You are debt free, you are young enough and you will get (or have) a large inheritance. It sounds like you will be fine. If you are waiting until your parents pass, out of respect (if I understand your post) I would wait.

[jpg7n16]

How to buy things

Step #1: Do I need this?

If no, then don't buy it.



I'm not sure I understand why you are considering buying something you can't use or won't need for a while. You're still a med student.

Your plans are for keeping as personal property, not as an investment property - and you don't need the personal property at this time, so why buy it at this time?

[mcfroggin]

How to buy things

Step #1: Do I need this?

If no, then don't buy it.



I'm not sure I understand why you are considering buying something you can't use or won't need for a while. You're still a med student.

Your plans are for keeping as personal property, not as an investment property - and you don't need the personal property at this time, so why buy it at this time?

You do need sound investments. The OP is considering the land as an investment - not personal property until he retires.

[wincrasher]

This could be an interesting investment, if you can structure it like a business.

You could possibly depreciate it's value, as well as write off expenses like maintenance and property taxes.

Key would be it not being your personal residence and having some kind of corporate structure, like an LLC own it.

Now the real question is, considering all that and the income that it could make, is it a better performing investment over the long haul that a stock portfolio?

Also, is this property in a place where the appreciation is extraordinary? In 40 years, maybe there won't be property as desirable as this even available?

You need to talk to a financial advisor, as well as talk to people in the "ranch business".

Good luck. Especially in having that talk with the parents about wanting to be a cowboy!

[shanecurran]

Also, is this property in a place where the appreciation is extraordinary? In 40 years, maybe there won't be property as desirable as this even available?

Another thing to consider in California is prop 13 which limits the property tax increases to 2% per year (once the property is sold the property taxes are reassessed given current property values). If the property appreciates faster than 2%$ per year, the property tax implications of the time of purchase could be huge, and also make incorporating the property a good idea if you decide to pass the property on to your children (you will one day die, but a corporation is infinitely lived).

[jpg7n16]

You do need sound investments. The OP is considering the land as an investment - not personal property until he retires.

Actually, yes he is.

I will eventually buy a large ranch-sized property in somewhere in the southern half of California to retire/summer at.

My point was that the OP is stressing over a situation where he feels compelled to buy because he might need it someday down the road - but he doesn't need it yet, so there's no rush.

Besides, OP stated that the purpose for making the purchase would be for the house. It was not an investment property decision - it was a use property decision. If he wants to operate it as an investment property, he needs to evaluate it as such and do a cashflow analysis to see if it'd be profitable until he took ownership.


I'm obviously in the 'park your money in another investment' camp.

[landon.bruno]

Purchasing is a good option. The inheritance won’t be a problem then. Just focus on your investments. Land can be a good form of investment for future. You can start with it