- May 11, 2024
- Posted by: legaleseblogger
- Category: Related News
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### Situation Overview
EDIT: I don’t plan on staying on IL, My parents are retiring close to my brother and are selling the home we currently reside in.
My parents are retiring close to my brother and are selling the home we currently reside in. The circumstances are very personal as to how I received this land, but I am looking for advice on to what I can do/what my options are.
### Personal Background and Inheritance
I’m a 19F living in Northern Illinois, graduated last year and was kinda just taking the year off to see what I wanna do. I recently and very unexpectedly inherited land in Texas. It was pretty out of the blue and all I know right now is that it’s a plot of grassy land, 4 acres, worth maybe around 300k. My first thought was to sell because I obviously live so far but my brother lives within an hour of the land and he offered me to come live with him, and said the land could be a good opportunity for me to invest in something. Being the youngest and only girl in an immigrant household I don’t know much about finance or upkeep of many things. I’m willing to learn because this seems like an opportunity of a lifetime but i’m not sure where to go from here? What should I do with this land, is there anything I should know?
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****** just grabbed a
No. This is a terrible investment. If you had instead inherited 300k, would you think yay! I’m going to go buy 4 acres of grassland in Texas? I doubt it. Just sell. If you want to invest the money, put it in an S&P fund or something. Or just pay cash for a house to live in where you want.
First thing you need to find out is if the land has mineral rights attached to it. In an oil and gas state like Texas, mineral rights can be very valuable. If oil is discovered near the land, you may be entitled to royalty payments. Look at the deed at the county courthouse. It may or may not address the mineral rights. If you do own the mineral rights, you can stipulate in a sales contract that you are selling the surface and retaining the mineral rights. It is also possible that you don’t own the mineral rights because someone before had severed them. You want to find out before you put the land on the market.
has road access and util’s to prop line? father away they are the more costly to get them there. then there’s zoning if residential house is allowed. prob needs well dug & septic perked too
it’s Texas maybe look into getting mineral rights as who knows could strike oil 🙂
Hi! I’m a woman who came from nothing, and I’m a millionaire now. I had to self-educate about investing as well as get a financial advisor to bridge the gaps in what I didn’t know. Here is my advice.
**Sell it. No brainer.** The fact your brother is trying to get you to settle in Texas indicates he doesn’t understand investing — the market is too hot right now, and given the trajectory of real estate in TX it’s very likely it will not be this hot again in future which means the property will depreciate. You moving to Texas means that you’ll be dependent on your brother and he’ll get to control the arc of a $300k property – this does not benefit you, but it does benefit your brother. Sell it. Real estate is a complicated investment, and you need to be quite an advanced investor for it to do as well as other investment vehicles. Your brother is not an advanced investor (or he wants to control this property), because if he was he’d be telling you to sell it. I’m more advanced and I wouldn’t take a $300k property in Texas. An index fund is a very safe bet for $300k.
Sell it and put it in an index fund – I’d do FSPGX, which as a 17% return (yearly increase) for the life of the fund.
**Here’s why.** Index funds have given 10.7% average return (increase in your money) year over year for decades. That is an exponential (a.k.a. compounding) return of 10% per year. If you invest $300k in an index fund at your very young age and don’t touch it, thanks to the incredible power of compounding returns (https://www.investopedia.com/terms/c/compoundreturn.asp) – you’ll have nearly THREE MILLION DOLLARS by the time you’re 40 years old. Check the math yourself: [https://www.nerdwallet.com/calculator/investment-calculator](https://www.nerdwallet.com/calculator/investment-calculator)
If the FSPGX fund does 17% for the life of your money, you’ll have $10,391,373.73 at 40 years old – that’s ten million dollars. It sounds crazy, but welcome to the magic of compounding returns.
A note: If you decide to sell, immediately put it into index funds and do not tell a soul. Give yourself maybe $2k in fun money, **do not give out loans,** you will be screwed even if they mean well because nobody respects a 19 year-old girl the way they should.
Texas is going to be one of the first places irrevocably impacted by climate change, it’s not a good property to keep. Sell the four acres and invest in an index fund. Keep working with a sizeable nest egg and enjoy your financial freedom. Congratulations!
I would suggest selling the land is probably the best course of action. Do you want to manage a bunch of land? What would you even do with it? Imagine being able to take 300k and invest it in a simple total stock market index fund like VTI. By the time you are 50 that 300k would likely have grown to something like $3M. Or maybe you want to use some of the 300k to buy a house in Northern Illinois and invest the remainder. So many options. Seems like keeping the land would come with more risk/unknowns.
First find a realtor and see what its really worth
– Look into how the land was titled. If it was only in his name, the land may have to go through the probate process before it will be titled in your name. You may have to complete this legal process before you can sell it.
– Make sure you pay the property taxes, so you don’t lose it to a tax sale. Contact the local property tax office and have them send the bills to your address, and make a note to yourself to ensure you get and pay the bills.
– It is a good idea to get insurance to cover you in case someone gets hurt on the land. If it is already insured, contact the existing company to discuss options with them.
– Be sure to regularly check on it for squatters, encroachments, poaching, dumping, or other problems. Your brother may be close enough and willing do to that.
– Note that even over the long term that raw land is a very speculative investment. You don’t know. If you kept it, perhaps the value would multiply several times over, and you win big time. Or, perhaps you’d pay property tax and insurance for multiple years, and end up making no net profit.
– If you don’t have other significant financial assets, most financial advisors would tell you to sell the land and invest elsewhere, but what you do is ultimately up to you and your risk tolerance. Note that capital gains tax is figured only on the change in value between when you inherited it and when you sell it, so if you sell soon your tax will be zero (or close to zero).
Sell, invest 300k in a stock market fund and in 30 years you will have enough to retire without ever doing anything else with it.
Look up compounding interest
In terms of _personal_ finance, I agree that it’s a much better idea to sell than to do something with the land, on the ‘if you had 300k would you go buy land in Texas’ principle — but once you get a valuation of the land, it might be worth thinking about whether your brother who has such grand ideas for the land would want it, and how much, if anything, you’d be willing to discount it by if he was buying it off you.
> a plot of grassy land, 4 acres, worth maybe around 300k
4 acres of land in Texas is only worth $300k if it’s in a VERY nice location and VERY nice land, like a nice little chunk of property within easy commute distance of Austin or something and it’s high and dry, with utilities at the road so it can be easily developed into a residence, and surrounded by other nice homes.
> this seems like an opportunity of a lifetime
I assure you it is not. Even if it’s worth $300k, which it most likely is not, life has may more opportunities.
If nobody is making you $300k offers go to zillow and search for land in the same area and you’ll see what land in that area is actually being listed at.
I’ve spent dozens if not hundreds of hours looking at land in my area. Yesterday I spent half an hour looking at it in another state. Land is rarely a blessing. It is generally held by somebody who thinks it is worth more than it is, and to develop it is exceptionally expensive. As you are aware Texas also has an awful lot of it, so there’s frankly no opportunity here to “develop” the land unless it’s got an oil derrick sitting on it or it’s a sweet little piece of commercial zoned property, etc.
**You came here ostensibly for advice and everyone here is telling you the same thing.**
The only way to make money off this land is going to require more money to invest in developing it, I’d pass and sell it, stick in the stock market and let it grow for 10yr.
This is interesting. I’m in NW Chicago suburbs and just inherited a house. I actually rather have land so I can build a different house. There’s no houses in stock that we want to buy.
Want to trade inheritances? Lol.
But in any case we both do the same thing and sell. The money now is worth more than what you might do with that land down the road, imo. I don’t know your situation but at 19 I could maybe camp out in a tent on 4 acres but not much else and an investment account with $300k might open a lot more opportunities for you down the road.
everyone is saying sell and unless you want to move to TX they’re right but I want to add something. If the land isn’t accessible by road, you may have a harder time with that than you think. Many banks won’t give a mortgage if the land is inaccessible by road. I had friends who took 2 years to sell land because of this issue.
Also, as someone who escaped Texas recently-don’t move there as a woman before menopause. Heck-I’d say don’t move there at all. As they screw themselves over with water issues that land seems unlikely to appreciate in value unless there’s a creek/river/spring something. And even then, groundwater is disappearing as it all gets pumped out. Sell it, take the cash and run.
One thing you could do is potentially break it up into individual acres. Then build a small house on one. Sell that for the same price you would sell all 4 acres and then build whatever you want on the other 3. Or you could repeat the process and sell all 4 individually then take that money and invest it into something entirely different
Look up tax implications!
Where I’m at, there is a HUGE difference between selling raw land (over 40% tax on profits) versus selling anything else (around 20% tax on profits).
For this reason, people will sometimes turn their land into a pay-to-store area first, or an RV campsite, etc. This would need to be for at least a year (where I am, as I understand it).
If you live on the land for two years (under some conditions, less), that can be a tax-free situation.
And I think it matters what part of the land is used. For instance, if you sell off an unused corner, I think that’s still considered raw land.
It’s been a while since I looked this up, but that’s what I remember!
Anyway, good luck with the land! Using it sounds very cool, too!
look into zoning to see what you can do with the land.
Keep it, if the taxes are not to high–on raw land, they probably should be low. Move to TX with the rest of your family and then get the lay of the land–literally. No rush to sell really.