Invest in Land or a Small 3-unit Apartment? Details inside
My cousin in Mexico is looking to either buy a small apartment, or invest in land (to build on in 5 years). She asked me for my advice, but I thought it would be best to to post this question to the community to get your opinion. Which would you choose? (all amounts below in USD).
A) The Apartment ($75,000 + $15,000 in renovations. 1,300sq ft)
-3 loft units (1 br / 1 bath each) + a commercial storefront
-Each loft can be rented out for an average of $300 a month (she mentions there wouldn't be much tax to pay on this income).
-The storefront she can rent out for $150 a month (she mentions there wouldn't be much tax to pay on this income)
-She will pay a $10,000 down payment
-Loan from the bank (for $65 of the $75k) is at a 8% interest rate, 20 year mortgage.
-located close to city center. it's an ok part of town. ~15min walk to the historic center but also it is 10-15min from a poorer rundown area
B) The Land ($40,000 total price / 3,229 total sq ft ÷ 2 = 1,615sq ft for her)
-Will split the the land with a close friend, 50/50
-Of the $20,000 she's responsible for, she will pay out of pocket $7,500. Dad will loan her $2,500
-For the remaining $10,000, she will get a loan from the bank (to pay for the amount she can't pay in cash): 36 months to pay, 22% is the apr. She can pay this off early in 18 months.
-This is in a very good area. A lot of projected growth over next 10-20 years, high income area, across the street from a new private school (k-12)
-Withinn 5 years she would like to build a house (to live or rent out), or 2-3 apartments on the space. This project would be between $50,000 - $75,000. The bank will loan her 70% of the total project price, at 10%.