When it's investor vs investor

[Cedar Wood]

For the past year I've been spending weekends rehabbing a vintage cabin, planning my next step to get the cabin ready as a short term rental, BRRR, and buy another cabin, my life dream. Until... I heard people tromping in the woods behind the cabin.

A non-local investment group had "picked up" a tiny overgrown lot adjacent to mine. Although it seems far too small to be buildable, they were talking plans to clear it, put a quick pre-fab structure on it, and resell for a tidy profit as a "turn key." I immediately recognized all the jargon I'd heard from the Bigger Pockets podcasts and books.

These investors are an LLC with capital behind them. They just put their newly acquired property on MLS through their broker to "feel out" if they could do a fast land flip. With market conditions due to covid, this area has zero inventory and an ever-growing demand, so they made a smart acquisition. They'll likely get their asking price, and possibly multiple offers. Their asking is almost double what they paid for it.

On one hand, I want to admire their smart move and be following a similar path. Yet, since I'm the property owner adjacent to their lot, if they clear the trees and wedge a pre-fab cabin on it, then my property value, and use as a short term rental, is diminished. It would destroy the visual privacy, and create noise and parking issues. In addition, clearing the land exposes it to winds and removes the roots that hold up adjoining tree; in the winter storms, this could send a massive tree crashing down on my property, potentially destroying the cabin that I've spent the last year rehabbing with my own sweat equity.

So while I was not planning to buy raw land, I now find myself in a quandary. Not buying the land results in these investors, or another buyer, taking out the trees to slap a cabin on it and flip it. If I put in a high offer with the intent to make sure I can get it and no one else, I end up massively overpaying, making those investors a sweet ROI, at the cost of my investment hopes and dreams.

My question to the forum is: how would you structure an offer to successfully secure the adjoining property, without escalating the sales price, knowing that the seller is there to make the fattest profit spread possible?

I'm thinking of making an offer with an escalation clause. If I offer asking and not much over, I risk another buyer outbidding me, and having the same issue of a next-door development. If I put the escalation at the very top end, I might one-up the other bidders, but reveal to sellers the very top price. Since they are savvy, they'll see the cut-off point and likely counter with that highest amount. Or they might just be "feeling it out" and my offer will only cause them to relist it at my highest escalation level. Heck, they might be reading this post right now.

I feel like the small investor up against a big-scale investor, with my long-hold hopes being squeezed by their fast-turn flips. What to do when its investor vs. investor?

[Mike Dymski]

Forget all the emotions and the noise around the buyer and their plans.  It's an investment and a math exercise.  Determine your investment returns with and without the adjacent lot developed and you have your max price for purchasing the lot.  This was part of the equation since acquisition.

Separately, we have to enjoy the ride, not just the destination.  I am work in progress myself on this front.