Commercial Deal- 3,4,5,6???

Question

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.

Emeka Attoh · Answer

I'll be the first to stay at the destination Airbnb.

Henry Clark · Answer

Our realtor said let’s throw a for sale sign up. Just finishing putting grass mats down.  Might plant a

Few shrubs and trees.

2.8 acres.  .8 is right of way.  So 2 acre build site.

Land about $40,000

Site prep $10,000

Culvert entrance $8,000Total $58,000.

Plan to list for $200,000.   Will we get it?  Who knows.  We have all cash in, so no pressure to sale.

If we get one nice rain the grass should pop.  Make the place look great.

Will put a concrete entrance once the ground settles over winter.

Next year just mow.

Site would be good for daycare, auto shop, country grocery store, regional distribution center, regional contractor shops.

Jamie Hora · Answer

Nice thread @Henry Clark. Question, where do you find the listings of the land for auction, at each County courthouse?  Was the bidding in-person or online?

Henry Clark · Answer

If it doesn’t sell next year I’ll build a destination Airbnb on it.

Henry Clark · Answer

Not yet.  Don't really have a business purpose yet.  Will let it sit and see how the economy goes.  Normally we don't buy land on speculation, we already have a value add purpose.  This one the $number was small enough and there is very little commercial land in the area.  Actually, did have a potential business idea for the property as a rental for Daycare.  But as I researched further, there is a project for $4mm for childcare in fundraising status already.

Ronald Rohde · Answer

Do you have signage up? COMING SOON

Henry Clark · Answer

Excavators making headway on this location.  Decided to go ahead and do site prep even though we don't have a use in mind.  Will let the ground settle for a year for compaction.  Plant grass over.  Got entrance in.  Seeding today.  Will put in grass erosion mats over the grass seed tomorrow.  Then put some recycled concrete chunks in drain ways to slow water down for erosion.

Love projects like this.  Smaller dollars so we can cash flow.  Don't have to worry about note payments.  Easy work hiring a contractor to site prep.  Lot of work, but not a lot of money.  Will get the bill later, they just completed today.  Won't worry about Electric and Internet.  They are right at the front and won't take long to install.  Need to wait till a Use is decided upon before running them.  Water will need to be through a water well.  Will cost around $7,000.  Wait till we decided what we want to do, that will dictate where the well goes.  Will get some witching sticks out tomorrow and make sure we have water on site.  Not worried since houses all around have water.  Sewer will be a drain field.  We are about a mile away from the town and would cost around $500,000 to run water and sewer there.

Great thing about a property like this on the main road, is people passing by will now see it is site ready and things will start to bubble in their mind.  Will probably get calls on its availability.  The City administrator already reached out to see what our plans were.

Grass seed in bags above.  Went back and got our tractor and already spread the seed.  The grass mat, we will lay down tomorrow in the easily eroded areas.  This is fall.  Grass sound germinate to about an inch then stop growing.  Will explode in the spring time.  This way we don't have to be in the mud next spring planting grass seed.

Ronald Rohde · Answer

great basis for land banking

Commercial Deal- 3,4,5,6???

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