What would you do w/ 3 acres?

Question

Hello All:

If you had 3 acres of land with a water well in Inland Empire, Ca, what will you do with it to appreciate its value and MORE importantly create cash flow?

Stick build home, why or why not?

Modular home, why or why not?

Manufactured home, why or why not?

Any other ideas? The lot is in a beautiful area. I bought it in 2009. Tried to sell it early 2020, but I missed the rt timing and I am now reconsidering other options.

Thank you!

David Edwards · Answer

The land has a well, does it have access to public sewer or would you need a septic system?

If septic is needed be aware of local requirements.

Here in the Houston area, I don't know yet about the rest of Texas if your home requires a septic due to lack of a public sewer you are allowed one family residence per acre, acre and a half if you also require a well.

If that was the case... I would look at building two homes ones on the land after subdividing into two 1.5 acre plots

Go spec home rather than design something specific to save on costs, you may be able to get a better deal with a builder and then sell them off for a profit.

If you do have access to a public sewer then figure out all of your land development costs, and your financial situation.

If you have never built before and don't have a partner who has I would go modular. Your bank has the security of a professional team building it out and there should not be a draw on the home until the day it is built and ready to be shipped to your location.

You will still have draws on the land prep though and you will need to manage that.

Some modular companies have single story duplex designs which I like due to the lower cost to value for a modular (no crane fees). You could fit a dozen or so duplexes on 3 Acres with modest yards and road/driveway infrastructure.

Build out 1 or 2 duplexes at first depending on your funds. If you project manager it right and the modular company is not swamped with work it should take you 3-4 months to go from basic land to installed and buttoned up duplex ready to rent.

Rent out the units except for 1, make sure you find out what people like, what they wish they had and see if it is cost effective not to design the stuff that would make them rent faster and or for more into future units.

Now post all over that you have rentals coming on the market, show off that empty one (maybe stage it) and use it in marketing.

State in the marketing and let those looking know that the new units will be ready in 3-4 months (depending on a viable build schedule). Get people commiting to move in when ready by putting up some cash.

Show your bank that things are going well, see if you can get better terms, repeat building 2+ units of duplexes based on market need and how your finances are set.

... anyway this is what I am planning to do, just working to finalize numbers and researching banks and unfortunately having to educate lenders and others about the value of modular and how they appraise/function the same as stick.

if anybody wants to talk, I am very happy to do so.

-Dave

Paul Moore · Answer

Hi @Alfredo Coria.  This may be a cop-out, but I don't think I know enough to advise you.  Perhaps you could go to a local REIA if you are in the area and seek some advice there.  And/or call some local real estate agents and developers.

Developing a new mobile home park is extremely challenging, by the way. That is why so few new ones come online annually.

Jo-Ann Lapin · Answer

Very loaded question . Rates are low and affordable quality buying is still needed . I would see if modular or manufactured is an option and see if  it pencils out.

Eric Teran · Answer

@Alfredo Coria you have to start with a site analysis so you know what you are working with. Site development cost can be extremely expensive and may kill a project if you can’t build enough homes.

I am a huge fan of modular and built my house with a modular system. Modular will always save you time and time is money. When it really saves money is where labor is high. Depending where you are in the IE it may be cheap and stick build may come around the same price. However it will take longer to build. As @David Edwards mentioned there are a lot of stock plans available for big properties.

Manufacturer homes may be an option if mobile homes are big in the area. Maybe you can start a mobile home park.

Do a site analysis and do a study on what will rent/sell better and then you have a good path to get started. Good luck.

Rachel H. · Answer

@Alfredo Coria Some of those options may require checking with zoning to see what you can and can't do with the land. Good luck!

Alina Trigub · Answer

@Alfredo Coria

You have to research a few questions/items first prior to making a decision:

1) what is the land zoned for/may potentially be zoned for?

2) is there a demand for such type of property?

3) what is potential investment?

4) what is ROI?

5) speak with the experts that have done it to see if you can pull it off

6) make decision on the next steps

Shaun Weekes · Answer

@Alfredo Coria

What city in the IE?

Alfredo Coria · Answer

How would you approach the financing aspect for modular dwellings? Build one, refinance, take money build more, refinance again, thoughts? Would you refinance your home (low interest rates), take that equity and build the first modular dwelling?

Alfredo Coria · Answer

@David Edwards and @Eric Teran thank you both for such an insightful and valuable information. Eric I started my site analysis and I am surprised of the things that can be built in a R-R zoning area ( dwlings, residential plan, mobile park, raise animals, food, etc...). I need to find out more on the demand (future and now) for the area; I think I am leaning towards the modular process. David, what a great approach; I am highly considering your model and replicating what you are doing (lets connect; there is a lot I can learn from you).

@ JoAnn Lapin, yeap, I have to pencil out what works best.

What would you do w/ 3 acres?

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