What could I do with vacant land?

[Patrick Philip]

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]

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.