Develop property for multi-family, single-fam, or something else?

Question

Hi BP community,

My mom recently inherited about 12 acres of pasture on the corner of Dixieland and New Hope in Rogers, AR.  It's adjacent to a police station, near shopping, and near the high school.  After lots of reading & listening on BP, it occurred to me that it might make sense to build some apartments there.  Alternatively, maybe a single-family neighborhood would make sense.  Then again, I'm open to AAA (storage units, gas station, etc.) as well.  If I pool capital with some other family members, I think we would have some options, and since we own the land, that seems like a huge start.  I am looking for cash flow and a buy-and-hold strategy, and my mom just wants to do something useful with her property.  I should probably mention that I don't know much about the zoning situation.  Currently the property is zoned agricultural, and I heard the population density zoning in that area is somewhat low.

I need some help narrowing my focus.  I have about $250K available to invest aside from other family members.  Up to this point, I have been scouring the MLS for SFH deals, and I have been thinking about pulling the trigger on a direct mail campaign in my own area of Cabot, AR.  However, it seems more efficient to buy one big multi-fam instead of hunting down a bunch of SF deals.  From what I have learned, you can fit about 33 to 36 units on one acre.  There's no way we have enough capital to fund anything close to 12 acres x 33 units at $1.25 sqft (+/-$39M).  Furthermore, it sounds like walkability is a big deal in NWA right now, and while the property is in close proximity to several good things, it's not walkable like downtown Bentonville.

Please help me with my strategy.  I need cash flow as part of my buy-and-hold goal.  Is it feasible to develop one acre at a time, slowly adding apartment buildings in row-like fashion?  There was a guest on the podcast who did that, but I believe there is planning that has to occur in terms of irrigation, pavement, etc.  Maybe there's something creative that hasn't come to mind yet, like a farm.  As I mentioned in the beginning, I'm open to developing the land into a SFH neighborhood.  Maybe I should make the neighbors mad and build a mobile home park, haha!  At least the cops would be close!

Thanks for your help,

Jordan Applegate

Jordan P Applegate · Answer

@Zach Quick, thanks for the reply & info.  I'll look into the best use of the land.  Welcome to my home town :)

@Greg Dickerson, thanks for the insight!  I'll check on absorption rates.

Henri Meli · Answer

@Greg Dickerson . Can you elaborate more on what you mean with absorption rate?

Greg Dickerson · Answer

The key is to determine the highest and best use and absorption rates. Once you determine that you can definitely phase the development to match demand.

Zach Quick · Answer

@Jordan P Applegate I would start with determining the zoning and/or talking with the city planning first to see what you can/can’t do with it as-is and they could help with suggestions on what they think you could get approved for.

Also consider getting it rezoned to a highest and best use and the land is worth more whether you develop yourself or sell it.

Familiar with the area, moving to Rogers currently. They aren’t going to approve a mobile home park so I wouldn’t worry about that.

And I’d also talk to a commercial broker to give you an idea of current worth, and/or ideas like parceling off the corner potentially. Can’t say I’d recommend storage as there are three new developing within 3 miles from there right now.