Have any of you considered or tried any methods to improve vacant land to sell faster or sell at higher margins?
On one property that I decided to do a minor subdivide on (5 way split) I ended up clearing all the trash off of the property, cutting in a road, putting in power, etc. It definitely improved the appeal of the property but it also notably increased my cost basis. It's not something I'm looking to do with all of my properties but i also wouldn't rule out doing it again if the right situation came about.
EB farmer's course and investment style is basically based on this forced appreciation style. As a house flipper before, I unserstanf the model but honestly like not touching the land if possible.
@jawollbrink said:
EB farmer's course and investment style is basically based on this forced appreciation style. As a house flipper before, I unserstanf the model but honestly like not touching the land if possible.
EB's course is a good one to cover this topic for sure!
Not far from me, a developer bought this 51 acre parcel of farmland and converted it into 22 large residential lots.
They put in electric utilities, a paved road, a retention pond, etc. Prior to the development work, the parcel was worth somewhere around $400,000. Now, each of the 22 vacant parcels are listed for $130K (that's a $2,860,000 gross amount, assuming they all sell at that price).
I have no idea how much this developer spent to do these improvements, but I'm sure it wasn't cheap. The neighborhood is laid out very nice (in my opinion, the lots are easily worth his asking price). When he gets them all sold, I'm sure he'll do very well. The as-complete homes will probably be valued at around $500K - $700K. It really is a PERFECT place to do this kind of development too, because the economy is (or was) strong, there's a shortage of housing in the area, and there are plenty of good comps nearby to support the asking prices of these lots.
This kind of project isn't for the faint of heart, because it takes a lot of investment to get done, and it'll be many months (years, even) for every lot to sell... but given all the positive attributes there are to support it, I don't think it's actually that big of a 'risk' per se... provided we don't see a similar recession to 2008. It just takes a speculative developer who is comfortable with bigger numbers, and a lot of money can be made this way.
@oranjoose I think one of the simplest ways to "force appreciate" land may be to take a landlocked property and gain easement access.
In certain states, like Florida for example, by law every person has a right to access their property. If the neighbors don't agree too giving you an easement you can essentially force their hand legally.
I'm working on a property right now in Jacksonville Florida and going through this process with an attorney, so it's all theory at this point, but I'm assuming the market value will majorly increase once an easement is officially established.
@Jarenb
Interesting. What is your all in cost of the process of aquiring an easment?
@jawollbrink my attorney is saying $2,500 - $10,000 depending on how much the neighbors push back. I'll probably make a video or blog post once it's all said and done, as a case study.
@Jarenb
Did you contact them directly about selling you an easment first? Or just go directly with the attorney...
@jawollbrink I contacted them first, both aren't interested in giving it to me.
@JT impressive!
Yes, I am interested in this business model. I already have a business that creates good cash flow. My interest would be to purchase land that can be improved for RV's, campsites, or cabin kits for short term rentals. In fact, I wouldn't need pennies on the dollar, but a good discount from retail listings if the infrastructure or improvements were present.
I haven't seen much content around this biz model. Thanks for the post.
