Purchased 7 acres of land for $20k...now what?!

[Kristopher Russell]

Keeping it simple:

I purchased 7 acres of land within 1 mile of a private university. Zoned for residential (single and multifamily, attached and detached). Only 1 house on the land which is too far gone to be renovated so it will be demolished soon. Minimum lot size required to build is 6000 sqft. 

I have a few strategies in mind: B(uild)RRR, sell the entire lot (least desirable), subdivide-entitle-sell, subdivide-build-sell, build a few multiplexes and rent, or even a combination of a few! The surrounding towns and cities have huge land development plans in the next few years also!

This is my VERY FIRST DEAL! Since my only risk in the short term is property taxes, I'm giving myself time to figure what's the most profitable strategy to use (preferably one that allows me to hold on to some of the land and create cash flow). 

I'm very interested in hearing what the experienced and new investors in the BP community would do with this deal.

Thanks!

[Geordy Rostad]

@Kristopher Russell

This sounds like it could be a winner. Land development can take years and have a lot of upfront costs such as roads, sewer, engineering, permits, hearings, etc. I have more ideas for you.

1) Find out what you've got: Draw out your new potentially plat map on CAD, take it to the city/county planning department and ask them "is this feasible? Do you see any problems here?

2) Bring in some immediate income: Get a permit to build a new house on a corner of the property that will still fit within the lines of a new subdivision. Depending on the market, maybe manufactured homes are appropriate for this due to cost and speed. If you can get one new house onto the property, at least you'll start to bring in some income while you're doing all the dev work. This is the real problem with vacant land investing.

3) Sell the dream: Do all the preliminary studies and work to get ready for the subdivision and then go market direct to local builders and land developers. You should be able to get a price like $X per lot "in the rough". Often, a builder/developer will make an offer to you like this. "If I can get 10 lots out of it, I'll pay you $100k, if I can get 15 lots, I'll pay you $150k" or whatever.

Don't get greedy. If someone came and offered you $80k for this piece today, don't blow them off. That might really be the best move. You'd quadruple your money and you can move on to the next deal. It's all about velocity. Especially when you are starting out.