I’m noticing a wide price range across the counties I’m targeting, anywhere from $3,000 to $20,000 per acre. Prices tend to be higher near cities where in-fill lots are in demand and larger acreage is harder to find, yet I’m still seeing a lot of sales for bigger parcels in these areas.
I know many land investors seem to prefer targeting counties outside major metro areas to avoid inflated prices. Seth has mentioned that a good sold-to-active listing ratio is around 0.75 to 1.5, but I’m curious—at what point do you decide an area is too “hot” or overpriced for your strategy? How close to a city is “too close,” and does the price per acre play a big role in your decision?
I realize the simple answer could be “buy what you can afford,” but I’d love to hear from others: do you stick to one price range, or use a blended approach when starting out?
I go for rural areas yet MOTIVATION of seller is a big factor. Seth I think spoke about 70% OF ALL PROPERTIES sold buyer paid too much. For me 80% of the purchase is determined by the relationship you create with seller. Remember the sale nearly always is emotional bases not logical.
Another metric you could look at is the average days on market (DOM) for the size or price range you’re targeting. This can be a little hard to nail down (similar to pricing properties) because some properties will sell a lot faster than other depending on how desirable they are, but if you’re looking for another clue to indicate market demand, DOM is another one to consider.
Keep in mind, you don’t have to get too rigid on this. You may find a great deal smack dab in the center of a city. If it’s a good deal and you are confident in what you can sell it for, go for it! But, as for targeting counties, I just try to stay out of the ones with a huge metropolitan areas in them.
In the case of Michigan/Detroit (for example), Detroit is in 3 counties:
Wayne
Oakland
Macomb
I would not intentionally target any of those 3 counties, because I’ll get into Detroit.
However, any of the surrounding ones would be fair game:
St. Clair
Lapeer
Genesee
Livingston
Washtenaw
Monroe
You could even go another layer out and those counties would probably be good, too.
If you know of any cities or zip codes in those counties that should be avoided (I might avoid the cities of Jackson and Saginaw, for example), then you can just exclude those from your list before you start your marketing campaign.
