I have a 5 acre residential / agriculture zoned land south of san Jose in Gilroy, California.

What are the best ways to monetize it? My land is close to where Amazon recently acquired 66 acres of land. I am paying taxes and losing money. My understanding is farmland prices don’t increase much and I should look at ways to monetize it. Renting to farmer is an option but my research indicates rents are like $1500-$2000 per year for a 5 acre land.

@Rakan Khalid You could look into storage for boats / RVs etc.

@Rakan Khalid

Just googled your town.  Look up Renz and Renz realtors.  They have 4 acres for sale for $650,000 on Monterey road.  Ask them your question.  Local knowledge is always better.

Not knowing the location or the property, I will use a $500,000 magnitude figure:

a.  You might be able to subdivide and do road frontage subdivisions or 1 to 2 acres depending on your Zoning.  To see if this is worth it: 1.  See if you can do it., 2.  See what 1 to 2 acres lots are running in that area.  Don't do a traditional subdivision, the roads and utilities eat into the profit and are a lot harder project.

b.  As mentioned storage.  This is a viable option, depending on Zoning and market.

c.  Do a 1031 into a property type you like.  Or just sell and pay the taxes.

Nice problem to have. Worst case you sell it and have $500,000.  Depends on what you paid for it.

@Rakan Khalid I am a farmer and developer here in So Cal.  Farmland is a very specialized asset, so I recommend that you identify a few brokers/agents who specialize in local farmland and make sure they are giving you similar information. There is a lot of farmland in Gilroy, so the expertise is available.  Look for signs on farmland or call your local Farm Bureau and ask if they can refer you to realtor members.

You need to be careful because there are a lot of sophisticated investors who will try to buy your land by the acre while citing agricultural comparable sales.  These buyers will be fully aware of infrastructure projects planned for the area, as well as large development projects coming your way.  You need this information too for your sell vs. hold decision. You want to sell retail and not wholesale, so expect the development price to be per square foot, while the agricultural price will be per acre.

Regarding monetizing your investment through annual rent, the typical cap rate on farmland is 2-4%. Land investing is more about capital appreciation than cash flow. Subdividing and storage are fine ideas if you can pull it off, but you are in an area that is tough with environmental and regulatory burdens.  

Best of luck. Brent

@Rakan Khalid

I happened to work for a construction company that often does tons of Amazon warehouse work. I would be be willing to bet that they are going to build another one or 5 here in Gilroy, CA.

With these warehouses comes tons of construction workers over the next couple of years. Often times construction workers follow the work (I’ve never seen people who commute so much). Having a place to stay that’s right next to Amazon would certainly draw a crowd of construction workers looking to get some sleep after a long day.

@Connor Doyle Thanks. Are you suggesting to build rental units? I am not sure if I can build multiple lands as the zoning allows for agriculture land or a single family residence with an ADU. In fact this is what the zoning allows:

https://www.codepublishing.com...

@Henry Clark and @Chad Hale - thank you for your reply. I will check if I can subdivide but storage may not be possible given zoning. Here is the zoning: https://www.codepublishing.com...

@Rakan Khalid

You could build an ADU and/or a JADU.

The main point is there is a specified market (construction workers) you could find creative ways to reach.