Author Topic: What about buying then subdividing large land parcels? Anyone doing?  (Read 1643 times)

Roland of Gilead

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Another idea that has crossed my mind is buying up large timber land parcels (>50 acres) and subdividing them to sell off for profit.   Timber land here is cheap in larger parcels, we bought this 30 acres for $2k an acre and it has $15k of timber on it.   We have a 2017 Kubota mini 4 ton excavator that is great for making roads, ditches and doing improvements.   It could be an interesting way for a little side retirement income.

Buy 100 acre parcel with $20k of marketable timber on it for $130k or so.   Sell off the timber, pay the tax and pocket $13k (selective logging, leave things nice).  Use the Kubota mini to clean up, build primitive roads and make it look park like.   Spend $2k to survey and divide into five 20 acre parcels.   Sell each parcel for $50k.

Walk away from the deal with $70k to $100k profit after taxes and fees.

Worst case scenario here is you get stuck holding 100 acres with $86 of property tax per year.  Could lease it out to hunters or something.

AccidentalMiser

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Re: What about buying then subdividing large land parcels? Anyone doing?
« Reply #1 on: October 07, 2017, 04:23:05 PM »
Are there services to these 20-acre parcels?  Can you reliably sell them for 50k, do you think?

I don't hate this idea but it would be a lot of work even with a mini-ex.  I grew up on 100 acres of ground, it's a hell of a lot of land.  It'd take forever to build roads on a parcel that big without a dozer.

In my area, when the loggers come in, they leave a huge mess behind.

I'm not saying don't do it, just do some serious due diligence.

Hotstreak

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Re: What about buying then subdividing large land parcels? Anyone doing?
« Reply #2 on: October 07, 2017, 04:58:23 PM »

Walk away from the deal with $70k to $100k profit after taxes and fees.



After how many hours of labor?  And how many expenses and how much wear on your equipment?  And with what approvals from the government?  And what is the market for unimproved homesteads with no services?  And I get that taxes are only $86/year, but you need to factor the opportunity cost of taking capital out of index funds - that is your real holding cost here.

Bicycle_B

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Re: What about buying then subdividing large land parcels? Anyone doing?
« Reply #3 on: October 07, 2017, 06:34:10 PM »
Someone will use that concept somewhere to make a fortune.  Someone else will try it and lose a fortune.  Hard to tell in advance which one is you.

My limited experience and observation of real estate (20+ years but very few transactions) is that in small/rural markets, which I assume you're in, real estate is a lot like poker in that it conforms to the sucker rule.  If you don't know who the sucker is at the table, it's you.

To me it seems like real estate is mostly a business, meaning a participation sport that involves experience or other skill acquisition, rather than a passive investment.  As such, the probability of winning or losing money is more affected by your skill level than anything else.  Are you skilled in real estate already?

I like the idea of limiting your risk, but suspect that the risk in beginner cases is not likely to be recognized until after it's too late.  My suggestion if you want to be in real estate is maximize your learning-to-risk ratio in every way you can. 


« Last Edit: October 07, 2017, 06:36:05 PM by Bicycle_B »

Brother Esau

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Re: What about buying then subdividing large land parcels? Anyone doing?
« Reply #4 on: October 08, 2017, 06:20:47 AM »
I'm a professional engineer and land surveyor. In my neck of the woods (pun fully intended), $2k is crazy cheap to survey and establish 5 new lots on an undeveloped piece of land.

Roland of Gilead

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Re: What about buying then subdividing large land parcels? Anyone doing?
« Reply #5 on: October 08, 2017, 06:37:38 AM »
I'm a professional engineer and land surveyor. In my neck of the woods (pun fully intended), $2k is crazy cheap to survey and establish 5 new lots on an undeveloped piece of land.

Is it?  I was not sure.  I thought they have moved mostly to gps now instead of theadolites or whatever.  I figured it would be maybe 2 days of work?

Brother Esau

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Re: What about buying then subdividing large land parcels? Anyone doing?
« Reply #6 on: October 08, 2017, 08:19:39 AM »
I'm a professional engineer and land surveyor. In my neck of the woods (pun fully intended), $2k is crazy cheap to survey and establish 5 new lots on an undeveloped piece of land.

Is it?  I was not sure.  I thought they have moved mostly to gps now instead of theadolites or whatever.  I figured it would be maybe 2 days of work?

The biggest chunk of work is physically installing the boundary markers for the road and the 5 lots. Typically, the road would be identified with concrete monuments and the lot corners with iron pins. The equipment is much improved these days and the office work would probably be minimal. Maybe estimate $10 - $15k for the design and layout of a proper 5 lot subdivision with a cul-de-sac road.

Roland of Gilead

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Re: What about buying then subdividing large land parcels? Anyone doing?
« Reply #7 on: October 08, 2017, 08:59:21 AM »
Man you start really digging into all of these ideas and then realize it is no wonder people just buy the S&P500 and go play golf.  14% return with no work.

Brother Esau

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Re: What about buying then subdividing large land parcels? Anyone doing?
« Reply #8 on: October 08, 2017, 09:27:35 AM »
Man you start really digging into all of these ideas and then realize it is no wonder people just buy the S&P500 and go play golf.  14% return with no work.

HA - exactly!

TonyV.

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Re: What about buying then subdividing large land parcels? Anyone doing?
« Reply #9 on: October 13, 2017, 02:01:27 PM »


Worst case scenario here is you get stuck holding 100 acres with $86 of property tax per year.  Could lease it out to hunters or something.

Hunters won't want to lease any land that has had all the timber removed. It wouldn't provide any habitat for huntable animals other than possibly waterfowl if there are ponds. Just FYI