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Updated 12 months ago,

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Henry Clark
Pro Member
#1 Commercial Real Estate Investing Contributor
  • Developer
3,633
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3,664
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Commercial Deal- 3,4,5,6???

Henry Clark
Pro Member
#1 Commercial Real Estate Investing Contributor
  • Developer
Posted

No punchline.  Just a story.

Had an online land auction today.  7 properties.  We were interested in 4 of them.  3/3/14/24 acres.  The other lots were 80/210/260 acres.

Unreserved auction.  


The two 3 acre spots the bids were in increments of $1,000 and the other lots in increments of $100.  

You could put a max bid in and it would continuously bid for you.

If there was a bid in the last 5 minutes of the auction on any lot, the clock was reset for all lots for another 5 minutes. 

My wife was interested so I walked her through the due diligence and maximum bid price for us.  

We like to build a 100% price increase.  So we worked backwards.  The two 3 acre lots we put a sales price of $75,000.   1/2 of that is say $37,500.  Divide by 2.8 acres= $13,000 per acre.  

The 14 and 24 acres we envisioned subdividing them into 3 and 4 lots.  Viewed them also at $75,000 each. So the 14 acre lot would be 3x $75,000= $225,000.  $225,000/2= $112,000 total.  Or $112,000/14 acres= $8,000 per acre.  

We knew the $8,000 would not be competitive in this market so instead of 100% markup we might go up to $10,000 per acre.

Ready set bid.  We ended up only getting one of the 3 acre lots for $13,000 per acre.   The other one went for $16,000 per acre.   The 14/24 acre lots went up or past our max bid.  Although we could have made a profit, not worth the juice.

Tomorrow we go look at another property a friend has to sell.  That is in our best market with excess demand for our business.  
You have to keep turning over the rocks until you find the gold.

Due diligence.  
This property is outside the city limits in the county but within the 2 mile limit of the city.  

Actual size is 2.81 acres.   The county requires a minimum of two buildable acres.  The .81 acres is consumed in the road right of way.  The 2 acres is based on having enough separation between the drilled water well and the septic system.  If you have city water in the county then your lot can be a minimum of 1acre.  

City sewer and water would be about $200,000 to extend to this property.

This is a long rectangular lot along the road.  I could tell it was not the required 300 foot depth from the road as required by the county.  Since this is within the city 2 mile limit they will allow a 240 foot depth.  They will override the county on this.

Driveway entrance. We will apply for one tomorrow although we don’t close for two weeks. The county has two concerns.  Line of sight both ways.  The line of sight distance is based on the type of road, major or minor.  Road speed.  At 55 on a major road it is 600 feet both ways.  So if you have a curve or the top of a hill at 450 feet you don’t get an entrance.  If you’re near a stop or intersection they may use discretion and reduce the distance since traffic will either be slowing down or not up to speed.  Just ask for a variance.  

Zoning.  This is zoned as Agriculture/Residential.  But certain small commercial businesses are allowed by Special Use variance.  

Why this property. Price is right.  There is zero property available along this highway.  This small town is a hopping bedroom community and growing.   The local banker has given 2 % loans to make some projects move forward.  Fiber optics in front.  Great cell reception.   These are critical in the country.  My favorite hamburger stand. Our best local restaurant.  This side of town has Sweet/fresh well water.  In town sulfur and hard water.  

This is a buy and hold.  Either a residential location or do a commercial Flex space.  

What the heck. Punchline

Start small and Make Your Big Mistakes Early.  

We will need to put some cost in. Culvert, plant some trees.  

  • Henry Clark
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