How to Identify Land Deals & it's Highest and Best use?

Question

I am a builder in Texas looking to get into land development. I know how to price out construction projects and build efficiently, but I'm still learning how to spot good land deals and identify what type of building makes the most sense in each area.

A few questions for anyone who's done this:

- How do you figure out if land is a good deal (especially without MLS access?)

- What's your process for deciding the highest and best use of a property?

- How do yo keep track of past land sales to compare values? Do most people use spreadsheets, or is there a better tool?

-Any early mistakes to avoid?

I'd really appreciate any help! Love to learn or connect with anyone who could spread some wisdom. Thank you!

Jackie Carmichael · Answer

Christopher, great questions — you’re thinking about this the right way. A few thoughts from my experience:

1. Figuring out if land is a good deal (without MLS):

• Most developers I know use a combo of LoopNet, Land.com, and county appraisal district sites.

• County appraisal + tax rolls often show recent sales and valuations, even without MLS.

• I also recommend connecting with a land broker in your target area — they’ll often know off-market deals.

2. Determining highest and best use:

• Start with zoning and entitlements — city/county planning departments will tell you what’s allowed (and what isn’t).

• Then layer in demand drivers: job growth, traffic counts, school districts, proximity to commercial corridors.

• A quick hack: pull the last 5–10 permits issued in that area. If they’re all townhomes or self-storage, that tells you what pencils.

3. Tracking past land sales:

• I’ve seen people use CoStar (pricey), Reonomy, or just simple spreadsheets where they log acreage, price per acre, and what ultimately got built.

• The key is building your own land comp database over time.

4. Mistakes to avoid:

• Overpaying because you assume entitlements will be granted (always verify zoning/permits first).

• Underestimating carrying costs — land can sit for 12–24 months before you monetize.

• Not planning your exit up front (are you selling entitled dirt, or building out vertical?).

If you want, I can share a simple land underwriting checklist I use that covers zoning, utilities, access, comps, and exit strategy — DM me and I’ll send it over.

Henry Clark · Answer

OP

First don’t build.  Treat that as a separate business than the land deal.

Make a checklist.  Fire hydrants, water availability, electric, internet, road access, road traffic, road turn outs, zoning- normally not an issue in Texas countryside, storm pond or drains, internal road surfaces, etc.  these are the major deal killers if you miss.

Deal makers-  more than one road side, shape of land relative to road access, nasty properties, market availability, boulders, water- you can make ponds, trees, walk out basements, isolation or access, Texas interstate traffic is not your market, look at loopnet or Crexi- look for the oldest listings.  Look in your GIS map- look for anyone consistently late, also any properties that in the last year or later transferred between family due to death.

Best use-  look up and down at other intersections or locations and copy,

Good deal?-  must achieve 100% cash on cash in 2 to 4 years if your cash.  If 25% down loan then 200% cash on cash return.  Minimums.

Stay away from Southeast Texas.  Better markets elsewhere in Texas.

Again, don’t build as part of the development strategy.   Make that a separate deal.