Would you rather pay more for a clean lot or less for a problem lot?

Question

Curious how others think about this:

Would you rather pay a premium for a clean, straightforward lot or get a discount on a lot that may require more effort to make it work?Does it come down to experience level, or just personal preference?

Bruce Woodruff · Answer

I always go for the problem deals...doesn't mean it's right, just that I'm comfortable fixing problems and always looking for a deal.... :-)

Brooke Adams · Answer

@Alan F.When you say it’s all about profit, do you ever get deals that don’t fit neatly but still feel hard to pass on? That kind of discipline usually keeps things consistent long-term.

Alan F. · Answer

Depends, for me its all about profit. Entitled or not if the lot $ is too high its no deal. As Bruce mentioned, big problems have big solutions & there's $ to be made, typically less competition too.

Kyle Vogeler · Answer

I think it all depends...

1. How much more am I paying for a clean lot? A $20K premium? More? Less?

2. How much of a problem is the problem lot? Do I have to spend $75K on a demo? Will I be held up for 2 years with the city getting the lot rezoned? Or do I just need to clear some trees?

The answer to those two questions will definitely change my answer in each scenario. Sometimes the trouble is worth is, other times, it is better to pay the premium.

Brandi Williams · Answer

Kyle's framework is the right one — it depends on the problem. Worth splitting "problem lot" into two very different categories though: physical problems (grading, clearing, demo) have a knowable ceiling. You can get a quote and know your number. Jurisdictional problems (rezoning, an ETJ issue, entitlement gaps) don't have a ceiling in the same way — they have a timeline, and timelines can slip for reasons that have nothing to do with your deal.

I'll pay a premium to skip the second category almost every time. A clean $75K demo is a known cost. A "should be rezoned in 6 months" is a guess, and I've seen those guesses turn into 18 months more than once.

Brooke Adams · Answer

@Bruce Woodruff

That comfort with problem deals is honestly a big edge most people don’t have. A lot of investors say it, but not many actually lean into it consistently. What’s been your experience with the “hidden cost” side of those deals; like time, stress, or things that don’t show up in the numbers upfront? Feels like that’s where the real difference shows up long-term.

Brooke Adams · Answer

That’s a fair breakdown, especially the part about small issues adding up even when the SOW is solid.

Kyle Vogeler · Answer

I haven't had any borderline projects regarding just a piece of land, but I have had a few that involved apartment renovations. Thankfully, these borderline projects have all ended up being a success in the end!

Brooke Adams · Answer

@Kyle Vogeler

I like how you’re framing it because it really does come down to degrees of “problem,” not just clean vs messy. Have you ever had a deal that looked borderline on paper but turned out way more one-sided once you got deeper into it? Those edge cases are usually where people either level up or get burned.

Would you rather pay more for a clean lot or less for a problem lot?

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