Everyone knows the real estate market has changed and smart sellers have adapted by lowering prices. If you’re interested in land, you also have to adapt by changing your approach to the buying process. Here are 5 new tips for getting the best deal in today’s market.

1. Don’t be afraid to take advantage of buying opportunities.

There’s more land than there are buyers, so you should be able to get a great deal in a great location. If we look to history for answers, we have every reason to believe the market will rebound. When it does, you’ll be happy you bought at the right time.

2. Do your homework.

Check comparable sales in the area to make sure the property you want is priced according to current market conditions. An honest land company will provide comps for you. Also, make sure the land is buildable and that you’re aware of the current property taxes, protective covenants, and zoning restrictions.

3. Negotiate.

In today’s market, the buyer has the advantage. Once you find the perfect piece of land, negotiate to get the best deal possible. This not only includes negotiating on the sale price, but on who will pay closing costs and other terms in the contract.

4. Buy with your heart.

Don’t be afraid to base your decision on your lifestyle and how you will use your land. If you love boating and waterskiing, buy on an all-sports lake. If you like fishing and swimming, buy on a smaller lake or river. If privacy is important to you, a stream-front or wooded lot might be more up your alley.

5. Be financially responsible.

While credit issues have limited some banks’ ability to lend, many institutions have great rates on land financing. Interest rates are still at historical lows, so do your due diligence and you will be rewarded with attractive financing opportunities.

Back in February, SmartMoney.com listed the best places to invest $100,000—real estate, charity, a new career, art, your home, or a hobby. Of course, we were immediately interested in their comments about real estate.

While the authors maintain investing in the housing market is fairly safe over the long term, they do acknowledge that it can be volatile at times. So, how can you sidestep the volatility? In their opinion:

Forget about a house, and buy land. As the old saying goes, they aren’t making any more of it. Land on average accounted for only 10% of a home’s value in 1950. Today it’s more than 40%. “The house is like a Honda Accord — it deteriorates over time. It’s the land that appreciates,” says Morris Davis, a real estate professor at the University of Wisconsin who has studied land values.

That seems like sound advice to us. So, what would you do with $100,000?

You make money when you buy, not when you sell a home, suggests one popular idiom. That could be the reason the wealthy are trolling for bargains.

While most of America is struggling with four percent gains in inflation, the wealthy, with discretionary income of $100,000 or more, believe that today’s market is a good time to buy.

According to The Annual Survey of Affluence and Wealth in America, from American Express and the Harrison Group, 40 percent of the nation’s wealthy plan to buy real estate in 2008.

The participants were divided into groups — the upper middle class ($100,000 to $149,000 annual income), the affluent ($150,000 to $249,000) and the super affluent ($250,000 to $499,000.)

Of the wealthiest, 41 percent said that owning a second home was “almost a requirement,” with 33 percent in the market for such a home in 2008. One quarter are shopping for a third home.

The wealthy view real estate as diversification from their other investments, and 88 percent believe that real estate values will rebound. Asked if the real-estate market represents a buying opportunity, 67 percent of upper middle class respondents agreed, as did 72 percent of the affluent and the super-affluent.

But only the most wealthy were more committed to putting their money where their mouths are. Seventeen percent of upper middle class respondents plan to buy a home this year, as do 24 percent of the affluent and 26 percent of the super-affluent.

Not that it means they’re scared of the market. They simply could already be real estate owners.

One in ten homeowners owns a second home, twenty three percent of homeowners age 45-64 own two or more homes, as do 24 percent of those aged 65.

One-third of the homes sold in 2007 were to second-home buyers and investors, says the National Association of Realtors, even though only 13 percent had incomes above $100,000.

Owning real estate isn’t just for the wealthy. It could be one of the best ways to become wealthy.

Reprinted with permission from Realty Times, http://realtytimes.com.

by Peter G. Miller

In the midst of all the gloom and doom on the housing front, one remarkably-bright statistic has just been announced: Last week the National Association of Realtors reported that 12 percent of all existing home sales last year were not primary residences, they were instead vacation homes.

It turns out that a lot of us have second homes at the lake, the beach, in the mountains or just somewhere different. The idea that so many of us have not just one house but two is at least counter-intuitive given that almost 1.3 million homes were lost to foreclosure last year, according to figures from RealtyTrac.com.

What do such numbers say about our housing market?

It takes a given number of dollars each month to support a primary residence, a standard that a large number of owners are not meeting. As the Mortgage Bankers Association explained in its most-recent delinquency report, “the rate of foreclosure starts and the percent of loans in the process of foreclosure are at the highest levels ever.”

And yet at a time when many households are plainly having huge problems, it’s clear that another group of households is doing very well. Not only can folks in this second group support one house, they can afford at least two.

The implicit reservoir of wealth represented by vacation property owners is important because it means there are large numbers of people out there with dollars that can be used to stroke the economy. If this trend holds up, it also means that about 600,000 second homes will be sold this year, a big and positive number at a time when big and positive numbers should be welcomed.

Reprinted with permission from Realty Times, http://realtytimes.com.

With eight homes completed in the past two years, three currently under construction, and possibly two more starting this spring, we thought it would be a great time to share with you the story of Bob and Linda Goltz, a couple that will soon have their ideal, Northern Michigan retreat at The Reserve.

In the summer of 2007, Bob and Linda Goltz closed on their homesite at The Reserve. With three grown children living in various places across the country, Boyne Mountain offered a convenient location with amenities and activities for their entire family. The Reserve at Boyne Mountain provided the Goltzes a location that was convenient to all of the activities of Boyne such as skiing, golf, hiking, biking, and the beach at Deer Lake, but was out of the hustle and bustle of the base—allowing them to create their own space to spend time together.

Working with Josh Howard of Howard Smith Corp., a builder that has completed several homes at The Reserve, the Goltzes outlined several requirements for their ideal family retreat. The home was to be a log home, had to provide ample open space for family gatherings and entertaining, enough bedrooms to comfortably house the entire family, have a walkout lower level, and be well-equipped to handle all the snowy and muddy gear that is part of outdoor life at Boyne Mountain.

Taking advantage of the homesite, Josh situated the house so it would accommodate a walkout design. With some modifications to the original plan, the garage was angled from the main section of the house to give the entrance a warm and welcoming feel. The breezeway that connects the garage to the house was designed as an oversized mudroom and catch-all. The interior has a very open floor plan—perfect for entertaining and connecting with family—a first floor master suite, two other large bedrooms, and a den that can be used as a fourth bedroom if necessary.

A few extra design features were also important: the main floor of the house is completely wired for surround sound (that will be extended to the patio this summer) and all the interior walls are insulated to help contain the noise of the socializing.

The Goltzes’ home was started in mid-Winter and should be completed by May—just in time for their first family gathering. Throughout the process, Josh and the Howard Smith team have been communicating with the Goltzes and working to ensure they’re completely satisfied with their new family retreat at The Reserve.

The Reserve at Boyne Mountain is a perfect place to create your family retreat. If you are thinking of buying and building, now is a great time to move forward—interest rates are low, construction is reasonable, and it’s a buyer’s market. You could soon be in the same position as Bob and Linda–planning your first family retreat at The Reserve.

The Money Magazine article we mentioned last week—“Build Your Dream House Now”—is one of the best assessments of the current real estate market that we’ve read. We recommend that you read the entire article, but let’s look at one section that’s particularly eye-opening:

Behind the dark clouds hanging over the housing market is a very compelling silver lining: The cost of building the home of your dreams is coming down. “If one or two years ago it cost you $300,000 to build a custom home, today it should cost tens of thousands of dollars less,” says Jim Haughey, chief economist at Reed Construction Data.

Why? With new-home demand drying up, the price of some construction materials has started to sink like a poorly laid foundation. Framing lumber is now 18% cheaper than it was 18 months ago, while drywall is selling for 40% less.

And because overextended developers picked up too much land during the bubble - and are motivated to sell - some lots are becoming dirt cheap. Land prices (often the single biggest expense for custom homes) in certain areas have fallen more than 20% in the past year or two.

“In terms of finding land you want at a good price, this is the best market that I have seen in my 30 years of home building,” says Carl Heldmann, builder and author of Be Your Own House Contractor.

This is exciting news for anyone who has been waiting on the sidelines for the perfect time to buy. Sure, some will wait for prices to fall even more, but existing home sales increased in February—the first improvement in 7 months. We’ll need to see a few more months of similar gains before we can say with certainty that the market is stabilizing, but it looks like the window to take advantage of these historically low prices will soon be closed.

“Why buy now?” That’s the question people are asking themselves.

The reality is it’s a buyer’s market. As one builder pointed out in a recent Money Magazine article, “In terms of finding land you want, at a good price, this is the best market I have seen in my 30 years of home building.”

I think most of us recognize that there are good deals to be had, but when is the best time to take advantage of the market? At the bottom, right? Well, how many of us have perfect timing? Whether it’s the stock market or the real estate market, it is very difficult to time things just right. In real estate, buying the right piece of property low, even if you don’t buy it at the absolute bottom, still has the potential to pay over the long-term.

The real risk of trying to buy at the very bottom is that you might miss the opportunity to buy the right piece of property—the one that suits your needs and the one that will see the best long-term appreciation.

How much can you save by waiting for the bottom? Let’s look at an example:

You decide to purchase a piece of land that was originally priced at $100,000. The seller has reduced the price by 10%, so you purchase it at $90,000. The market continues to slide a bit and the price falls another 5%. Then it starts to climb again.

Let’s assume you put 20% down on the property and get a 15-year mortgage at 5.625%. Your monthly payment would be $590 as opposed to $557—a difference of $33 if you had waited for the bottom.

Knowing that there are many buyers waiting for the bottom, is it worth $33 a month to risk missing the right piece of property? The probability that you will be able to time the market perfectly is quite low. The better bet is to find the right piece of land in this buyer’s market, negotiate the best price, take advantage of the very low interest rates, and make the call with the long-term in mind. Otherwise, you may end up paying more or, even worse, losing your dream property to an even savvier buyer.

Over the last couple of months, several customers have asked about alternate ways to finance land they are considering purchasing for investment. This isn’t surprising considering that McKeough Land Company is offering some significant discounts for multiple-lot purchases. Based on these conversations, we researched alternate ways for people to take advantage of this buyer’s market.

One interesting and little-known opportunity is the ability to purchase land through a self-directed IRA. “Golden Opportunities in Real Estate for Savvy Investors” explains the process for using a self-directed IRA to buy any type of real estate.

There are several reasons to consider buying land using funds from your IRA, but the most prominent one is that any profit that is generated from the investment is tax-deferred, just like the earnings from your regular IRA or 401K. Once you have decided that you would like to make an investment in land, the process of buying through your IRA is pretty simple:

1. Create a self-directed IRA account (several companies offer this type of product)
2. Liquidate funds from your current IRA or 401K and place the funds in your new self-directed IRA
3. Purchase the land through your self-directed IRA

There are restrictions and accounting considerations, and the details are included in the article linked above.

To make the process of land investment using your IRA easier, McKeough Land Company’s Northern Michigan office has created a strategic alliance with Retirement Investment Alternatives, LLC, a Suttons Bay-based company that specializes in helping clients set up and purchase property through self-directed IRAs. If you would like more information on our strategic alliance and how to purchase land using your IRA, please email Thompson Godfrey or call (800) 290-LAND.

by Kenneth R. Harney

Despite a lot of sobering economic news for housing and real estate, there are some definite positives taking shape out there.

Pooh-pooh them — or ignore them — at your own peril.

First, the powerful combination of fixed 30-year mortgage rates in the mid-5’s and house prices rolled back to 2003 and 2004 levels in some areas HAS to begin attracting the attention of consumers. That could happen as early as this Spring in some local markets — or later in the year, but the buying opportunities are undeniable.

Second, despite all the grim and gloomy predictions about recession, the U.S. economy is still growing. No question that rate of growth slowed dramatically in the most recent quarter, but the fact is: The U.S economy is NOT in recession, thanks to a couple of key factors:

Total employment gains during the past 12 months exceeded one million new jobs. That measure went negative in the latest month by 17,000 jobs, but the month before job creation was UP by 82,000.

Exports-which jumped by an extraordinary 7.7 percent in the past 12 months — are fueling some of that employment vigor.

Real after-tax household income rose last year by 1.1 percent. That may not sound like much, but in a giant economy such the United States–it’s good news. In a recession, that number would have been negative.

Now to the housing market’s prospects: Within the next 10 days to two weeks, the President is expected to sign legislation raising mortgage limits for the three most consumer-friendly financing programs - Fannie Mae, Freddie Mac and FHA.

(editor’s note: the President signed the legislation on February 13.)

Home buyers in high-cost markets will gain access to much lower-cost financing compared with the deal-killing “jumbo” rates they’d otherwise have to pay.

How big a difference could that make?

Compare payments on a jumbo loan at current rates of 7 to 7.5 percent to the 5.75 to 6.0 rates they’d potentially pay after the legislation takes effect.

Estimates vary as to how many sales and purchases this change will stimulate, but an independent economist on contract with the National Association of Realtors puts it at close to 348,000 additional home sales in the coming 12 months.

Bottom line here: It’s not all gloomy out there. There are some hints of a pick-up on the horizon — provided you’re open to seeing them.

Reprinted with permission from Realty Times, http://realtytimes.com.

Buying with confidence from a trusted source is always in your best interest.

Are you hoping to find a secluded, lakefront parcel that someone priced foolishly low? Surely you’ve seen or heard about those advertisements that say you can buy a lakefront paradise for pennies on the dollar. There must be a catch, right?

Well, just like our parents taught us, if it sounds too good to be true, it probably is. That doesn’t mean great deals aren’t out there—especially in this buyer’s market—but it does mean you should be cautious. One of our customers recently received an unsolicited call from someone offering an unbelievable deal on land. When our customer asked to see the land in person, the caller became uncomfortable and pressed him to buy it over the phone. Our customer declined, did some research, and discovered that the land being offered wasn’t even buildable.

Prudent buyers seek facts before they spend money. There are honest, reliable developers and there are happy, satisfied lot purchasers. The reverse, unfortunately, is also true. Make it your business to find out all you can about the company and the property. Land is a big purchase. Make sure you do it right.

Buying land is quite different from buying a home or commercial property. A building or house is sure to have a street address and likely a fence or some other landscaping in the yard to mark the lot lines. When buying a home, you know exactly which property you’re viewing. That’s usually not the case with land.

When buying land, you’re buying the raw land on which to build your home. So, there’s no building, street address, or a lawn. There are just trees—sometimes lots of them. Telling the difference between one parcel and another on your own can be confusing and frustrating. And you might even end up trespassing on your future neighbor’s land.

In order to get a really good feel for the land and know exactly what you’re looking at, it’s best to build a relationship with a knowledgeable land consultant. A good land consultant will meet with you, walk the land, point out the lot markers, discuss zoning and any building restrictions, give you information on the surrounding area, and, most importantly, be there to answer any questions that arise while you’re on the property. If you’re willing to spend the time looking at property, you should not only appreciate having a knowledgeable land consultant there—you should insist on it.

Another advantage of working with seasoned land professionals is that they know the property, they know the comparable property in the area, and they know the current market. They’re land experts and understand that clients are looking for value. By starting a relationship with a land consultant, you can be the first one contacted when a new property is being introduced to market, when market conditions create a favorable climate for buyers, and when the company is offering special promotions, such as discounts on multi-lot purchases.

Working with a land company can offer you the best of both worlds: you can find property that offers beauty and value, and you can buy this dream property with total confidence.