value land in an up and coming area

[Ryan Thomas]

Hi all,

Does anyone have a POV of how land value changes once someone has taken "the plunge" and started development in an underdeveloped area?

I am looking to potentially purchase 4 plots of land that are listed at $90K. The current owner bought these 4 and another 4 for $50K back in 2016 and has built Class A duplex on 4 of the plots and is now selling the other 4. The rest of the area is undeveloped and doesn't have much going on.

I am struggling to value these because

-There are no other comps around to compare with

- I have researched the current duplexes and they perform quite well as STRs and it would work for me all the way up to the $90K ask. However that owner bought these plots for $25K only 3 years ago and the market in this area has only gone up 25%. I worry I would overpay?

-How do I take into account that he has already proved this area works in that he was the first to build here?

-How do I approach the negotiation without pissing him off that I am questioning his ask price, should I ask him how he valued these at $90K when he bought for $25k?

I am looking at purchasing 4 plots of property to build multifamily properties on. The owner is asking for $90K. The land was originally sold to the current owner as 8 plots back in 2016 for $50K. 

At the time there was only trailers around this piece of land and the current owner has built class A multifamily properties on 4 of the plots and is looking to sell the other 4. I have done researcher and the current multi family properties perform very well even if I were to pay the asking price of $90K.

Given the owner paid $50K for 8 plots, how should i value the 4 plots?