Suggestions for Building 0.54 acres of Land?

Question

Hello BP,My parents own a 0.54 acre (23522 sqft) piece of land. It is near Prarie View Texas A&M University, about 50 minutes from Houston, TX downtown. I believe it has potential for student housing.My question to you is, what would you suggest doing with this piece of land? My dad has experience with building (he built the house I live in), but he lacks consistent motivation. What's something I could suggest that would be simple, yet profitable?I'd appreciate any feedback you have.Is this the right forum topic? If not, what is?

David Edwards · Answer

@Victor Yap I was just looking at Prairie View day before yesterday, I am new to the Houston area myself and looking at the various sub-markets. From what I can see you are absolutely correct and student housing is likely the way to go. I echo the recommendation that you put down modular units, they are faster but depending on your dad's experience he could also scratch his itch to build something and manage the ancillary roadwork, fencing, and so forth. In fact depending on your lands dimensions I would recommend you have developed either a 2/2 duplex or a 2/2 quadplex (two single story duplexes is easiest) on the property. I ran some initial numbers and I believe you can make that work with a 5% down new build loan, I recently saw that Quicken Loans is happy to finance modular. You and/or your dad just have to have the intention on living there when you get that low a down payment on that loan (as well as meet the other standard criteria)... But maybe you refinance out of that loan quickly into another after the build is complete and you can realize equity (ideally 20%'ish). I'd also recommend putting on the lot, maybe between the duplexes a small laundry (make money vs having laundry in units) but build it out nice as a sort of community gathering place for your student renters. This is just a quick idea I have been noodling for the last 2 days and no skin off my back to share. I am happy to discuss further or brainstorm with you if you would like just send me a connection and we can talk further. -Dave

Jim Spatzenfeld · Answer

First find out the zoning on the land. If it’s zoned for just one single family house, here in California it’s almost impossible to get it rezoned for multifamily. Too many NIMBY’s. It’s might be the same in Taxass.

Victor Yap · Answer

@Steve MorrisFor the backstory, my dad is a very DIY type of person. He’s also a handy man and mechanic. He and another person built the house I grew up in.So I trust he knows how to build and how to spot problems with a property, but he’s just not as financially savvy. He’s retired now so I think that’s put him in a very relaxed mindset.Every now and then he reminds me about that piece of land and how he wants to build something and make it a learning experience for me. I hope so too, but that’s why I’m asking for suggestions. Then I can go to him with a plan and get this property earning something!Thanks everyone for the ideas so far. 🙏

Steve Morris · Answer

My question to you is, what would you suggest doing with this piece of land? What does the zoning allow? Student housing is kinda tough right now (unless you can get the next Mahomes as a tenant!!!), so banks may be a little iffy on construction loans (if they're doing them at all).My dad has experience with building (he built the house I live in), but he lacks consistent motivationThat sounds like an interesting backstory.

Andrew Wicklow · Answer

Student housing is a great option, however, it might be wise to wait right now as colleges and universities may experience lower enrollment going forward based on COVID. If you can zoom a class from anywhere, will everyone choose to be close to the actual campus? Only time will tell....Andrew - Investor and Insurer of Investment Properties (Nationwide)

Jason Wray · Answer

Victor, You could always save your Dad some time and work and just buy/build a stick built home Modular or true Manufactured Double/Triple wide. Modular true prefab non HUD tag style home is a lot easier to sell later down the road. If not just build a true SFR/duplex but your looking at 8-12 months in most cases.

Erickson Sainval · Answer

Depends on your goal. If your more for cash flow, you can always try to zone it multifamily and build you one. If you are looking to create your own diamond, and the area makes sense for it, could try making a luxury home. If you can keep the cost down while still creating a beautiful home, you could walk away happy.One note though that has always stuck with me. Houses can be built but they definitely aren't making anymore land. Personally for me, first option I would like more.