need help with estimating apprec for bainbridge/kingston...

[t4uecker]

[Alan]

[t4uecker]

[wreckingbull]

[rose-colored-coolaid]

[laxtosnoco]

[george]

[Alan]

I like the P/E approach. How much income will the land generate now? How much will it generate in the future? If you build housing on it, how much would it rent for? How much would that housing sell for (which ultimately is tied to rent). When will that income be available? You have to take into account holding costs.

The price of the land will take into account everybody's opinon on the income generating ability of the land. To get a better than average return, you will need to get a better than average estimate on the future earnings potential. I do not know how to do that, but I can guarantee that polling a bunch of strangers their opinion will not give you the edge over common opinion.

Or you could just buy it and hope that you will find someone who values it even more. But if you are going to do that, you might as well go to Vegas and play craps. You would probably even get better odds.

[wreckingbull]

I admit my 3-byte response was not very helpful, and Alan posted a much more appropriate post.

The point I was getting at is this: We have lost sight of the concept of P/E and how it applies to real estate. This is why I rent at 35 cents on the dollar and this is why we now have a loudly hissing bubble.

Rather that think about what a greater fool would pay down the road, take the time and perform the admittedly difficult and subjective P/E calculation. I am guessing you plan to build a residence on this land? If that is the case, take a look at comparable rents on similar-sized land, and factor in how much it would cost to put a SFH on your land, including such things as permitting, septic, power, well, etc... This will give you a reference point to start with.

If you are talking about commercially-zone land, then of course you will have an entire new set of calculations to perform. Agricultural land...yet another set of calculations. I propose this is not a formula, but as an approach to value calculation.

[TJ_98370]

For what it's worth, Eleua, who is an alleged Bainbridge resident, is convinced that Bainbridge is way overpriced and poised for a fall.

Also anecdotedly, Bainbridge is known to be the lucky recipient of much out-of-area specuvesting the last few years.