I recently acquired a 3.53 acre vacant lot located in a county industrial park with easy access to power, water, electricity, etc. It's located in a rural county in Nevada with ~ 10,000 residents. I'm looking for ideas from more seasoned investors/builders/developers to figure out the best use for this property. How much value is added to vacant land by just doing the basics of getting it professionally surveyed and getting utilities to the lot?
I'm open to all ideas and suggestions. Self-storage facilities seem to be booming everywhere these days, but I'm not sure the population of this county would support something like that. Anyways, thanks in advance for your advice!
You are probably very limited as to what you can do in an industrial park. Check your local city codes as what the definition is and what are aloud building type/business types. Industrial is a lot different than business so depending on the city definition a storage facility might not work there or only under a special conditions permit. Also with a population that small you might be right that a S.S. might not be viable. You will need to figure out what your city is lacking and try to fill the holes or find something they didn't know they where lacking. Either way you either find or create a demand.
As for survey and stuff thats basically a waste of money until you are dead set on what you are going to do. It adds no value to the land and doubtful you would even break even with. Those types of things just come with dealing with developments. Bringing utilities in is basically the same thing. You might be able to up the sale price but you'd be lucky to break even, especially if utilities are not close by to begin with.
Oh and if you haven't thought about financing a new build you need to. It is not the same as financing a buy of a built building.
Hey Tyson, I'd look at the UDO for the municipality. That will tell you what type of construction the specific industrial zoning will allow. Once you have that list, go down it and see what might be the most profitable, or the one you're most interested in doing. Let's pretend it's storage.
Self-storage costs about $20 - $25 per foot to build, maybe a little more depending on what you want to build. See how much square feet of storage you can fit on your parcel given the ordinances (setbacks, etc.). This is a rough estimate, so it's better to underestimate how much you can fit to see if the numbers work.
Next look at the competition.
Currently, there are 7 to 8 feet of storage per person available in the U.S. If the population within a 3 mile radius of your parcel is 10,000 people, that tells me the area can support roughly 70K to 80K of self-storage. That is not a hard number but a good place to start.
Next use the measuring tool on your local GIS, or maps application on your desktop, and measure the buildings of each facility within a 3 mile radius of your parcel. Then total the square feet (yes, I'm serious :)). It's tedious to do, but that will tell you the supply of storage. Search for all the facilities within a 3 mile radius of your site and call them to see if they have availability. If they're full, then demand might be a little higher than 70k to 80k sf. If they're not full, demand may be softer.
Now look at their rents for each size unit. Using that you can determine if the rents at your potential facility will be high enough to cover the cost of construction and turn a profit.
Hope that makes sense. If you have a little cash to burn, I would recommend getting your parcel surveyed and having utilities located. Then work with an engineer or landscape architect familiar with storage to see what size facility is feasible. If I were to take a guess, I'd say you can fit about 25K to 30k sf. of storage on 3 acres, but that depends on the building requirements for storage of your municipality.
I hope that helps!
PS--there are easier ways to figuring out the feasibility and supply-demand, but that's the DIY of doing it without paying a dime.
Great ideas Kris. Thanks for sharing.