What could I do with vacant land?

Question

Very general question...As a real estate investor, what could I do with vacant land? There's lots of relatively inexpensive parcels for sale.Would home building be my only option?

Tom Parris · Answer

Hey @Patrick Philip,You first will have to understand what it takes for a lot to be buildable. What's the minimum buildable lot size? What are the set backs? (Set back is distance from the property boundary to the building.) City of Tampa, 20 feet from the front and back, and 7 feet on the sides. What is the property zoned for? If you want to build a multifamily on a lot that's zoned Single Family. Won't work. What is the cost to build a home there? Talk to a contractor. They will give a cost per square foot. Are there trees on the property? What kind of trees? Are they protected? You can get around the protected trees, but it's a huge pain. Impact fees can be around $17k. If there was an existing structure, there's a great chance that it is already equipped with water, sewer, and electric. What's new construction selling for in that area? You have to get building plans from an architect. You can either buy plans that they have done in the past for $1-3 a square foot, or $5-10 for original plans. This is total square footage too, including garages and patios. Plans can get expensive. Developers will pay at most 20% of the After Development Value for the land, max. If I can build a $300k home on this lot, the most I'll pay is $60k. That is also on a lot that build ready, after clearing and impact costs. If you don't want to get involved with building, you can make money by flipping the land. You buy it, clear it, impact it, and then sell it to a developer who is willing to build on it, but doesn't want to do that annoying stuff. You could also sit on it, and wait for the area to appreciate. I own 8 parcels of land, 4 of which I'm just waiting to appreciate.

Andrew Syrios · Answer

You can make a fortune in development... and you can also lose a fortune. I've known people who've had both experiences.

Tom Parris · Answer

@Patrick PhilipImpact fees are the costs to provide the water, sewer and electric to a piece of raw, untouched land.The contractor helps you with that. A tear down, or a vacant land with a history of having a house, will already be impacted. Call the local utility company to find out. Drive around established, older neighborhoods. Find a property that's in the middle of construction, or a dirt lot with a black silt fence around it. Look up who owns that piece of property, they are the developers. There will be a post at the front of the property with a while case on it. If you open up that case, there will be paperwork., Building plans, permits, etc. Read the names and take down any contact info you see and call them. OR if they are on site, ask the for the guy in charge. THE CLEANER THE JOB SITE, THE BETTER THE CONTRACTOR. Any general contractor can build a home. To find one, I'd go first to a Realtor. Realtors sell homes which sometimes need work done to the house, so they'll know a couple contractors. If not, check out home depot and talk to the guy that's in construction clothes but is clean, that's your GC. Typical cost of materials for a standard 3/2/2, 2000 total square feet is about $125k. Expect to pay $25k-$50k for your contractor. Expect a timeline of 4-6 months from getting the building permit to Certificate of Occupancy (CO). The CO is what the county/city provides after the property has passed all inspections. It also deems the property livable.

Patrick Philip · Answer

What's the guarantee that it will double in value quickly?

Patrick Philip · Answer

But you have to have money to get started. At this point, I think I might get a better ROI with residential rehabs with the funds that I have.

Matthew Moore · Answer

Since your from Florida I’m gonna assume that the property is as well. Being from Florida myself I know how lucrative Rv parks can be. Relative simple start up(as compared to home development) and you’ll never have to worry about missing out on a (season) you have summer and when you don’t have summer you’ll have snowbirds. Best of luck!

Patrick Philip · Answer

Thanks. I have a few questions.1. What do you mean by "impact it?"2. How do I find developers?3. How do I find the best contractors?

Patrick Philip · Answer

I once knew a contractor who made over a million bucks building homes. Difference is, he didn't have to pay a contractor.

Andrew Syrios · Answer

Build on it or sell it. Although I should note, there are many different things you could build on it, which may be the best thing to look into with regards to a value play.

Tony Cash · Answer

If it makes sense for the area build a duplex on it.