Buying a Vacant Lot in An Upscale Neighborhood

[Thomas Fawole]

Hi BP members. I would appreciate your opinions on this matter. I’m not familiar with vacant lots. I’ve read a lot about analyzing properties but not much about analyzing vacant lots. I came across a vacant lot in an upscale neighborhood in one of the big cities a couple of days ago. The houses in that neighborhood are in the $600,000 to $900,000 range. I'm willing to offer to buy it for $180,000. I called the broker who has asked me to send in a proof of funds. I believe I could wholesale it to a builder or partner up with a builder if the offer is accepted. If we spend $350,000 putting up the building, and we sell it for at least $700,000, the $170,000profit will be reasonable. I just want to be sure that buying this fairly expensive vacant lot would not amount to a speculative deal. Thank you

[Scott Todd]

@Thomas Fawole As a full-time land investor, I see these "deals" all the time. The issue I see is that you are essentially paying retail for the lot and not leaving yourself with a margin of safety. Vacant land at this price point is negative cash-flowing, taxes and POA fees (if any) along can quickly turn this good deal into a loser. Having a development plan is great, I would get the property under contract and ask for a due diligence period to try to pre-market it to the builders. Good Luck.