Land Development Close to the Beach - Is it worth the effort?

[Phil LeNeveu]

Hi All! 

So I have been a long time reader of the website and all the advice from this community has allowed me to make a handful (4) of  investments so far so thank you for all that!

But wanted to run the real meat of discussion by everyone here to see if I am crazy or if something is possible...I feel there is a deal but not sure if the effort would be worth it for one singluar person and may need more institutional capital etc.   

I currently live in Boston and through a relationship, have access to around 60 acres of land in a beach town in an expensive area of Maine (not on the beach but 1.5 miles from the beach) for a significant discount. The owner bought the acres 40 years ago and has been holding them since and is looking to retire in the coming couple years. Some of the acres are zoned for building (but aren't cleared or flattened) and the others aren't zoned yet but have good road access and have a natural well so wouldn't be too hard to get the rest zoned (would need septics and power but lines are close) as it's in a residential area. (the owner also works in excavation so could flatten and prep the land himself and dig the foundation)

Houses in the area go for $300k-$450k and we have tossed around the idea of zoning the properties on something like 2 acre lots each and building a few modular or cheaper stick-built rental properties and renting them out and having the owner, who lives in the area be my property manager as kind of a retirement gig. Been doing a good amount of research and given the owners connections in the contracting world could probably build the houses for $150k - $225k and given the area and the land would be worth more and could potentially refinance? 

Happy to provide more details / but just wanted some advice and seems like a really good opportunity but is it too much for one / two person undertaking?  

Thanks!!!!

[Frances Buerkens]

Land close to the beach in Maine is generally flat and swampy and often has a lot of vernal pools. Vernal pools are ecologically significant seasonal pools and are only obvious to the naked eye in the spring (unless a more experienced person knows a way of IDing them off-season???). Geeky science lessons aside, this impacts your development options.

Vernal pools are protected by Maine DEP. You cannot build on them or drain them which would impact your land value and development options. I assume that the presence/absence of vernal pools would be evaluated during a land survey process when you apply for permits. This is something I learned during a real estate license class five years ago, so you should double check my memory before calling this fact.

Potential workaround: Placing the portions of land that have vernal pools under a conservation easement could ease your tax burden (which is significant in Maine). That land can't be developed anyway so I doubt there's a downside to doing that.