Land Investing

Anyone here into flipping dirt?

I hear its the new quintessential American Dream for city and suburban dwellers.

 

Land, bare land?

Difficult to leverage. Bad dream, but has been done. Waiting game. Sometimes well worth it, other times a nightmare with zoning changes, stalled permits in the region. People talk.

 

Ide be scared, you may be sitting on it for years, takes a special buyer...
Obviously area has alot to do with it..

 

Agreed, could be a long wait with holding costs and no cashflow.

I'm looking into a play that sub-divides raw, unrestricted land into smaller ranchettes. Like cutting a pizza and selling them by the slice. See operators with 2-3x in 2-3 years.

 

We've put redeveloping a property we own on hold. Just for that we have too much uncertainty right now. Example: Spend a lot when contractors can't know costs? My day job in $ 14 billion food, distribution, beverage and general merchandising firm shows chaos and challenges in short-term and a ways out to have some more caution.

All that said, a downturn can be a time to buy things so it will stay in mind.

 

So true. I also see general activity slowing down due to extreme uncertainties. Meanwhile, some folks are saying things are turning into a buyer's market.

I also hear hedge funds are exercising caution.

If only my magic eight-ball was working

 

If you have the money to pay the taxes on it while you wait for the value to appreciate, you might do pretty well. Around here, any property worth building on gets scarfed up by developers, who go for anything from a half acre lot to 200 acre plats. They borrow against future returns to buy and develop the property and given how often they're doing that, it must make some serious coin.

Consider this: I own my house and the house next door which is a rental property. The total property is about eight acres, almost all of it buildable and it has over 200 yards of highway frontage in a suburban city limit. My house is worth about $400K, the rental about $250K and the land is worth about $500K. I've been here for 30 years. My house was built in 1967, the rental was built in 1950. If I were to sell the whole thing, and I get mail offers almost every day from companies who say "we'll buy your property for $XXXX and you don't have to do anything", what they would do once I was gone is demolish both houses, run a small street down the middle and put about ten houses on it, if not more. In 5 years their return on investment would be around 200%

There is a lot of "old family land" in my area, what used to be farm cropland or pasture. As the owners get too old to manage it and their kids either don't want it or inherit it and sell it, the land gets sold to these developers and a couple years later, what I call a "beehive" appears. High-density housing, either apartments, townhouses or 1300 sq. foot single family homes which are close enough to each other you can stand between them and touch both. Yard the size of a postage stamp and a driveway so short you can't park two cars one behind the other without the ass end of the back one out in the street.

 

Great play here with residential home-building. Suburbs in north Dallas also getting smaller and smaller yards. They're getting rid of the alleys as well.

 

If you can pay cash, proceed cautiously. Do your research. If not, it's not worth it.

 

Vacant land is the only thing around their not making any more of. So there is a 'rarity' factor.

But it's similar to any other investment. Know what you are buying and proceed with caution.

Is it something that will flood? Is it accessible? (I've seen folks buy land with no ingress easement, surrounded by other property). Does it have timber or mineral value? Is the current zoning tax favorable? etc etc.

It winds up being a substantial list of things to research.