The 3 Steps on How I Purchased Land for my Son. By: Prince Dykes, MBA, AFC >
“Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense and managed with reasonable care, it is about the safest investment in the world.”
– Franklin D. Roosevelt
My son Wesley celebrated his 8th birthday and again I wanted to purchase him an asset. I decided to purchase land to add to his portfolio. I personally feel as though land is the most undervalued and most affordable asset in real estate. Too often we lose site of the value of land because of what’s on and what’s close to it. Regardless of what economic situation we may experience, you can live on and off of land. Land is also very low maintenance and requires no tenants or property managers. The downside is land usually doesn’t rise in value or generate a cash flow like rental properties and houses.
Here is how I purchased land for my son.
1.Personal Loan: I could have purchased the land in cash, but I decided to use this as an opportunity to build credit as well. How, you may ask? I took out a personal loan to purchase the land and used the cash I had to pay off the loan early. I acquire an asset and it will reflect positive on my credit report. Using credit and paying off the loan ahead of schedule positively affects the credit utilization and payment history portion of my credit score.
2.Purchased Land: I search online via varies sites to find land for sale in Colorado. Once I found land in my price range, I contacted the Seller to see if the land was still available. I hired a closing attorney to conduct a title search and to close the deal. The title search verifies the person selling the land actually owns the land and that taxes are up to date. I added my son’s name on the deed and had all documentation notarized.
3. Taxes: Congrats! You have made your child a land owner BUT now you are responsible for property taxes. Property taxes are due annually and vary from state to state. In 2019 the four states with the lowest property taxes are 1. Hawaii, 2. Alabama, 3. Louisiana and 4. Colorado.
I framed the deed and hung it on the wall. When I showed Wesley his birthday gift, he wasn’t too happy. Hopefully he will thank his dad later. One day he can live on, grow on, sell or use the land as collateral for a business.
The information provided in this blog is for informational purposes only. It should not be considered financial advice. You should consult with a professional to determine what may be best for your individual needs.