Is
land a good investment?
Yes and No.
No, if you require a big return on your investment within
3 years. Land values have leveled off after six years of appreciation:
an MDI building lot worth $30,000 in 2000 is worth $120,000 today,
but will probably take several years to get to $150,000. Land should appreciate
at 6-8% annually.
Yes,
if you can get a piece of quality saltwater frontage at a reasonable
price. Plan to hold it for 7-10 years.
Yes, if you can get a chunk
of acreage to subdivide within commuting distance of MDI. There is
demand for off-island lots that are affordable, i.e. $35,000 to
$40,000.
Benefits
of condo living vs. single home ownership?
The major benefits are the same here as anywhere:
Shared Maintenance. Keeping
up a home by yourself is hard work and expensive. Condo maintenance is
typically contracted by the unit owners’ association. Each
unit’s share of the cost is usually less than
the cost of keeping up a traditional home.
Security. There comes a time when it’s a blessing
to have neighbors at hand, even next door or across
the hall.
Freedom. It’s wonderful to be able to lock
the door and wander off for a month or more, knowing
that your home is in good hands.
Amenities. Often condos offer benefits that individual
owners might not be able to get on their own: acreage
next to the national park, ocean or mountain views,
heated pools, lower fuel costs, affordability, owner
financing.
I
purchased my home 6 years ago. Is this a good time sell?
Yes. In this market, the maximum appreciation occurred
between 2000 and 2004, so the value of your house
probably doubled. But now rising interest rates are
nibbling away your market value. So you must sell
sooner than later to realize your maximum return.
The key to selling sooner is accurate pricing. If
your house doubled in value, it won’t sell
if you list it at three times what you paid for it.
Is
it important to have a property surveyed before buying?
Yes, if the parcel
is larger than 5 acres. Yes, if the property is in
a village where lots are small and folks have gotten
casual about the exact location of lines. Yes, if
you’re buying expensive shorefrontage, and
double yes if you’re thinking about dividing it: there is a minimum
amount of running feet on the shore required for any new lot.
No, if the property is an approved subdivision with blazed or flagged lines
and clearly monumented corners.
Having said this, surveyors here are expensive and hard to get. In the absence
of red flags, you may want to adjust the purchase price in lieu of the headaches
of getting a survey done in your lifetime.
Is
having “town” water and sewage preferable
to having my own well and septic system?
In this market, you usually don’t have a
choice. Properties are on public water and sewer
or they’re not, the alternatives being private
wells and septic systems. As to water, many people
prefer the taste of unchlorinated well water. Properly
installed and maintained septic and sewer systems
are equally reliable.
Since public utilities rarely
extend beyond the cores of villages and towns,
the real choice is between living in “town” versus
living in the country. The type of water or sewer
delivery is just one of many factors to be considered.
Is it worth buying investment property for rental
purposes?
Not if your goals are income, appreciation, and
minimal headaches. It’s hard being a long distance
landlord. You can hire a property manager, but the
cost reduces your profit. Rents in Maine, reflecting
rural incomes, are low relative to urban and suburban
areas. The rental income may not cover expenses and
debt service.
For several years, there was a strong market for
single family houses that could be converted to vacation
rentals. With few exceptions, supply of vacation
rentals now seriously exceeds demand.
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