Are infill lots still profitable with today’s construction costs?
Member since 2021 · 95 posts · 23 votes
Are infill lots still profitable with today’s construction costs?
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Investor · Richmond, VA · Member since 2020 · 108 posts · 135 votes
5mo@Brooke Adams Infill lots are still very profitable for me in at least 3 of my markets. I am trying to cover more ground in GA and make additional inroads there. Just purchased a parcel in Macon, still determining whether to do BTR or resell to a builder.
21 Replies
- Fayetteville Arkansas · Member since 2026 · 44 posts · 12 votes5mo
I don't really know, been asking myself the same question. I think in markets where sale cost per SF is high and you can build at a contractor rate than yeah, they are. Another play is to take a large lot, split it, and than do infill on 2-3 lots and remain under residential codes. This way you get scale at a low entry cost point.
- Member since 2021 · 95 posts · 23 votes5mo
Quote from @Iliya Muzychuk:
I don't really know, been asking myself the same question. I think in markets where sale cost per SF is high and you can build at a contractor rate than yeah, they are. Another play is to take a large lot, split it, and than do infill on 2-3 lots and remain under residential codes. This way you get scale at a low entry cost point.
Feels like that price per SF spread is doing all the heavy lifting right now. The lot split idea is a solid angle too, especially if it helps squeeze out better margins. Are you actually coming across those kinds of deals, or are they pretty rare?
- Fayetteville Arkansas · Member since 2026 · 44 posts · 12 votes5mo
I come across those but in urban areas that needs densification. But you gotta be smart with which city you are working with, not all are easy in handling this.
- Member since 2021 · 95 posts · 23 votes5mo
Yeah that makes sense. I can see how it really depends on the city you’re in. The lot split angle is interesting though, just feels like those opportunities probably aren’t super easy to come by consistently.
- Investor · Richmond, VA · Member since 2020 · 108 posts · 135 votes5mo
@Brooke Adams Infill lots are still very profitable for me in at least 3 of my markets. I am trying to cover more ground in GA and make additional inroads there. Just purchased a parcel in Macon, still determining whether to do BTR or resell to a builder.
- Member since 2021 · 95 posts · 23 votes5mo
Quote from @Maurice Smith:
@Brooke Adams Infill lots are still very profitable for me in at least 3 of my markets. I am trying to cover more ground in GA and make additional inroads there. Just purchased a parcel in Macon, still determining whether to do BTR or resell to a builder.
Appreciate the insight, Maurice. It’s encouraging to hear infill is still penciling out in several markets. Macon seems like an interesting play right now. Curious whether you’re leaning more toward long-term cash flow with BTR or taking advantage of builder demand on the resale side.
- 5moPhilip JosephPro MemberInvestor · Warner Robins, GA · Member since 2021 · 97 posts · 51 votes
Quote from @Maurice Smith:
@Brooke Adams Infill lots are still very profitable for me in at least 3 of my markets. I am trying to cover more ground in GA and make additional inroads there. Just purchased a parcel in Macon, still determining whether to do BTR or resell to a builder.
I build In middle GA...I'm pretty picky were I build in Macon for myself, as some areas just don't support the values I'm looking for. But, I will build anywhere for others. If you decide to sell, send me the location as i may be interested. Note, I only build to sell in Macon, so the numbers may work better if you want to hold as a rental.
- 5moPhilip JosephPro MemberInvestor · Warner Robins, GA · Member since 2021 · 97 posts · 51 votes
Quote from @Brooke Adams:
Quote from @Maurice Smith:
@Brooke Adams Infill lots are still very profitable for me in at least 3 of my markets. I am trying to cover more ground in GA and make additional inroads there. Just purchased a parcel in Macon, still determining whether to do BTR or resell to a builder.
Appreciate the insight, Maurice. It’s encouraging to hear infill is still penciling out in several markets. Macon seems like an interesting play right now. Curious whether you’re leaning more toward long-term cash flow with BTR or taking advantage of builder demand on the resale side.
As an investor, who after doing 30+ renovations decided to become a General Contractor, I can tell you what I see from both sides. I like the BTR model, especially for 3 to 4 units. I still don't think the numbers make sense in my market to BTR SFRs, especially if you are financing 80% of the cost. In fact, I no longer purchase SFRs from realtors or wholesalers, I buy land and build my own.
As for buying land, I build entry level homes, so the margins are pretty low. I personally have only purchased a few lots from wholesalers or on the MLS because the price is often to high. I have pretty good success from my marketing campaign, auctions and word of mouth.
- Member since 2021 · 95 posts · 23 votes5mo
Quote from @Philip Joseph:
Quote from @Brooke Adams:
Quote from @Maurice Smith:
@Brooke Adams Infill lots are still very profitable for me in at least 3 of my markets. I am trying to cover more ground in GA and make additional inroads there. Just purchased a parcel in Macon, still determining whether to do BTR or resell to a builder.
Appreciate the insight, Maurice. It’s encouraging to hear infill is still penciling out in several markets. Macon seems like an interesting play right now. Curious whether you’re leaning more toward long-term cash flow with BTR or taking advantage of builder demand on the resale side.
As an investor, who after doing 30+ renovations decided to become a General Contractor, I can tell you what I see from both sides. I like the BTR model, especially for 3 to 4 units. I still don't think the numbers make sense in my market to BTR SFRs, especially if you are financing 80% of the cost. In fact, I no longer purchase SFRs from realtors or wholesalers, I buy land and build my own.
As for buying land, I build entry level homes, so the margins are pretty low. I personally have only purchased a few lots from wholesalers or on the MLS because the price is often to high. I have pretty good success from my marketing campaign, auctions and word of mouth.
That approach is pretty common for builders I talk to lately; cutting out retail deals and just going straight to land so the numbers can be controlled from day one. That’s usually where the gap is right now with infill.
Respect the grind on building your own pipeline too, that’s where most people struggle but it’s also where the consistency comes from.
- Investor · Richmond, VA · Member since 2020 · 108 posts · 135 votes5mo
@Philip Joseph thanks. If I build it will be BTR.
Infill lots can be profitable, but it depends on the entry price and the exit value of what you are building, even with current construction costs.
Densification is a helpful strategy, where it makes sense. We have two adjacent lots in a prominent infill location that we are putting six townhomes on.
But we are constantly looking at how to attack costs. We just built our first home with a panelized wall system and are interviewing modular suppliers now. Construction costs are not just labor and materials, but time and financing costs as well. You have to take a sharp look at everything, all of the time.
- Member since 2021 · 95 posts · 23 votes4mo
Quote from @Ryan Arth:
Infill lots can be profitable, but it depends on the entry price and the exit value of what you are building, even with current construction costs.
Densification is a helpful strategy, where it makes sense. We have two adjacent lots in a prominent infill location that we are putting six townhomes on.
But we are constantly looking at how to attack costs. We just built our first home with a panelized wall system and are interviewing modular suppliers now. Construction costs are not just labor and materials, but time and financing costs as well. You have to take a sharp look at everything, all of the time.
Agreed. Infill is still viable, but it’s very entry price and exit dependent. Densification definitely helps where it pencils. Cost control across time, financing, and build methods is where the real focus is now.
- 4moJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Ryan Arth:
Infill lots can be profitable, but it depends on the entry price and the exit value of what you are building, even with current construction costs.
Densification is a helpful strategy, where it makes sense. We have two adjacent lots in a prominent infill location that we are putting six townhomes on.
But we are constantly looking at how to attack costs. We just built our first home with a panelized wall system and are interviewing modular suppliers now. Construction costs are not just labor and materials, but time and financing costs as well. You have to take a sharp look at everything, all of the time.
LOL never heard the term Densification before .. I like Charleston SC were you can do horizontal condo plat really easy.. or other markets were you find hidden lots of record underneath a lot and do lot segregation that is an over the counter process ( Portland Or.)
I personally think that cost control is something that should never be neglected, no matter who is paying or what the market is. There is no downside to margin expansion (or stabilization) from constantly questioning everything and looking at all angles.
You will be stronger going forward from the skills you learn in the uncertain times.
- Member since 2026 · 5 posts · 1 vote4mo
Civil PE here — on infill, the thing that quietly kills the pro forma usually isn't vertical cost, it's the site/civil surprise nobody priced. Before you bank on a number, a fast buildability read pays for itself:
- Utilities: is water/wastewater actually there with capacity, or is a line extension / MUD / tap fee on you?
- Drainage/detention: on-site detention quietly eats lot yield.
- Access & easements: legal frontage or a recorded easement, not just "it touches the road."
- Floodplain: pull the FEMA panel — fringe you can usually work with, floodway is a different animal.These deal-killers are catchable in a couple hours of desk work. I've watched people spend $30-40k on survey/geotech/title for a lot a quick utility check would've killed. Sequence it: cheap desk read first, then spend on survey/geotech only if it clears. Happy to point you at exactly what to ask the city/utility for.
- Member since 2021 · 95 posts · 23 votes4mo
Quote from @Chad Colter:
Civil PE here — on infill, the thing that quietly kills the pro forma usually isn't vertical cost, it's the site/civil surprise nobody priced. Before you bank on a number, a fast buildability read pays for itself:
- Utilities: is water/wastewater actually there with capacity, or is a line extension / MUD / tap fee on you?
- Drainage/detention: on-site detention quietly eats lot yield.
- Access & easements: legal frontage or a recorded easement, not just "it touches the road."
- Floodplain: pull the FEMA panel — fringe you can usually work with, floodway is a different animal.These deal-killers are catchable in a couple hours of desk work. I've watched people spend $30-40k on survey/geotech/title for a lot a quick utility check would've killed. Sequence it: cheap desk read first, then spend on survey/geotech only if it clears. Happy to point you at exactly what to ask the city/utility for.
In my experience, you’re absolutely right, it’s rarely the vertical cost that breaks the deal, it’s those site/civil surprises that show up late in underwriting.
Utilities, drainage/detention, access, and floodplain are usually where things quietly shift once you move from assumptions to reality. A quick buildability screen upfront tends to save more money than anything you’ll catch later in survey or geotech. Great framework!
- Member since 2026 · 5 posts · 1 vote4mo
Brooke, exactly. I think of it as the uncertainty discount. When utilities, drainage, access, floodplain, or entitlement path are unclear, buyers either price worst-case or pass.
Jay’s point on hidden lots of record / horizontal condo paths is a good example too. Sometimes the upside is not just “cheap dirt,” it’s knowing the entitlement path well enough to unlock density or avoid a bad assumption.
For sellers, the win is usually not a 50-page report. It’s a clean one-page buildability screen with the city/utility answers already pulled.
- Dallas, TX · Member since 2026 · 29 posts · 7 votes4mo
In North Texas — yes, but the margin for error has gotten a lot thinner and the due diligence on the front end matters more than it used to.
The lots that are still penciling are the ones where the buyer did real homework before closing: confirmed utility availability and connection costs, checked flood zone status, understood the permit timeline for that specific city, and had a realistic handle on what infrastructure costs would look like before they factored in vertical construction.
Where I see infill deals fall apart right now is the gap between what a lot looks like on paper and what it actually costs to make it buildable. Impact fees have gone up across most DFW municipalities. Utility extension costs are higher. And if you're in a city with a permit backlog, the carrying costs during that wait aren't trivial — especially with where construction loan rates have been sitting.
The deals that work are the ones where the buyer treated the land purchase like a development project from day one, not an afterthought to the build. The ones that don't work are the ones where someone fell in love with a lot and figured out the real costs after they'd already committed.
- Member since 2021 · 95 posts · 23 votes4mo
Quote from @Brandi Williams:
In North Texas — yes, but the margin for error has gotten a lot thinner and the due diligence on the front end matters more than it used to.
The lots that are still penciling are the ones where the buyer did real homework before closing: confirmed utility availability and connection costs, checked flood zone status, understood the permit timeline for that specific city, and had a realistic handle on what infrastructure costs would look like before they factored in vertical construction.
Where I see infill deals fall apart right now is the gap between what a lot looks like on paper and what it actually costs to make it buildable. Impact fees have gone up across most DFW municipalities. Utility extension costs are higher. And if you're in a city with a permit backlog, the carrying costs during that wait aren't trivial — especially with where construction loan rates have been sitting.
The deals that work are the ones where the buyer treated the land purchase like a development project from day one, not an afterthought to the build. The ones that don't work are the ones where someone fell in love with a lot and figured out the real costs after they'd already committed.
Really aligns with what I’ve been seeing too, especially the gap between paper feasibility and actual build costs.Are you adjusting your approach at all or sticking with what’s worked?
- Dallas, TX · Member since 2026 · 29 posts · 7 votes4mo
Sticking with what's worked on the fundamentals — flood zone, utilities, permit timeline, infrastructure costs before vertical. Those don't change.
What I'm adjusting is how early I'm having the infrastructure cost conversation. A year ago I could underwrite utility extension and impact fees with reasonable confidence based on recent comps in a given city. Right now those numbers are moving fast enough that I'm going directly to the municipality earlier in the process rather than relying on what closed six months ago. Fee schedules that were accurate at the start of a project cycle aren't always accurate by the time you're pulling permits.
The other adjustment is on permit timeline expectations. I'm building more buffer than I used to and being more direct with buyers upfront about what realistic looks like in specific cities versus what optimistic looks like. The gap between those two numbers has gotten wider in a lot of DFW municipalities and people need to underwrite the realistic number, not the advertised one.
The core framework holds. The inputs just need fresher data than they used to.
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