Looking for best use extra lot on single family House

7 Replies

Hello All,

I have been involved with real estate for about 1.5 yrs. I bought a house which I am currently "BRRR-ING" Trying to finish the work up on it by March. The house came with two separate lots, one with the house on it, the other is empty. When I finish the house and get it re-appraised I will be looking to do something with the property (sell, lease out, build something etc). The lot is a corner lot in the Hilliard, Columbus area. Has anyone had this type of situation? I am looking for any possible guidance (I am very new to the game) in terms of what I could potentially do with the property to help me get this real estate thing rolling quickly yet efficiently.

The lot is sized for a single family residence. 

Originally posted by @Mitchell Krotz :

Hello All,

I have been involved with real estate for about 1.5 yrs. I bought a house which I am currently "BRRR-ING" Trying to finish the work up on it by March. The house came with two separate lots, one with the house on it, the other is empty. When I finish the house and get it re-appraised I will be looking to do something with the property (sell, lease out, build something etc). The lot is a corner lot in the Hilliard, Columbus area. Has anyone had this type of situation? I am looking for any possible guidance (I am very new to the game) in terms of what I could potentially do with the property to help me get this real estate thing rolling quickly yet efficiently.

The lot is sized for a single family residence. 

 Hi Mitchell!  Sounds like there is a lot of potential and many options.  Building another property on the land seems, at first glance, like the best way to go.  PM me so I can get you some additional information. 

Robert Ellis, Real Estate Agent in OH (#2014002724)
(614) 943-9520

What would a new house on your lot sell for? Look at what other new construction is selling for and what it would cost to build.

@Mitchell Krotz

Hi Mitchell:

You have such a great opportunity here. There are a few opportunities here, depending on your risk tolerance, ability to execute on a new build scenario , what the land is zoned for, and if your present lender (if there is one, encumber both parcels):

Higher Risk/Zoned for SFH

  • - Split the lot from existing building parcel, build a new SFH, and sell it, keep the cash or pay down your basis in existing unit.
  • - Vice versa: sell the old unit, keep the new unit (easier/lower cost maintenance in rental scenario), keep the cash or pay down basis of new unit
  • - Split the lot from existing, build a new SFH, and rent it, hold long term

Splitting the lot (or un-tieing it as some call it), gives ability to sell units separately if needed, or to finance them separately with different lenders/banks if that is a better situation. Maybe one has a regular mortgage, the other has a HELOC for discretionary capital to do other deals. You can always encumber both lots with one loan at your discretion.

Higher Risk/Zoned for MFH

All the same scenarios above, just that you may be able to build more units on the vacant lot

Lower Risk Tactics

  • - Sell the land now as is, easiest, nothing to manage or build, just sell it. Will generate least amount of value. 
  • - Sell the land later, possible appreciation, still no build needed
  • - Sell the land now or later, with full set of architectural plans without permits, no build. Slight value add.
  • - Sell the land now or later, with full set of architectural plans, processed through city plan check (called RTI "Ready to issue" permit status). Still no build, value added with RTI plan and permits. More value add as compared to first two items this list.
  • - Use vacant parcel after untie, as collateral for new loans to do other deals, use the raw asset value. Wont' be able to get HELOC, as no lender will loan HELOC against raw land. Hard money lenders will be most likely for success, but will still need to search many, as raw land loans are always perceived as high risk by all lenders, commercial or private.

If this were my deal, I would maximize value by preparing plans, complete plan check/RTI process, and sell. Max value without need to build. We call this an "entitlement" deal, where you the developer do all the prep, plan check,/RTI ,but sell without building. Max value with no build scenario. As I have said in other posts, the most money we have ever made in real estate, was finding a great parcel of land, completing the zoning and planning process, preparing the maps/plats, then sell that package (land + approvals).

~ Scott

Hi Mitchell,

GO BUCKS!!!   Scott is right on the money with all his suggestions and you sure have a wonderful opportunity. My brother lives in Hilliard and I'm guessing there aren't many vacant lots left so that makes your lot even more valuable. Couple that with a good school system and you can't go wrong whatever you decide. The most important part will be to get with a title company or attorney and get those lots split before you do anything. Good Luck!!!

@Mitchell Krotz

One point of clarification, on the "Low Risk" scenarios, where you would sell the land, I meant all the land sale scenarios to be after you split the two lots. All land sale scenarios assumed in my mind that you keep the parcel with the existing building. After I reread my post, wasn't quite clear as I'd like. 

Good luck!

Ladies and Gents,

Thank You all for your help and input!  I will looking into splitting the lots ASAP and figure out my next plan of action there after!  Thank you so much!

Now another question I have is if I placed a single family residence on the empty lot, how does that change my main residence after two years and being able to take out earnings tax free? Does this second building fall under some sort of umbrella where I can rope it under the first property since that was all under my first mortgage and the two lots where included under my original residency purchase?   

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