My parents live in a SFH on 5 acres, and were wondering if they should sell the home and land as is, develop it, or take an interim step to try to get a bit more value out of it as it's their retirement savings. It's a property with some potential that I'd be grateful for feedback on from the BP community.
The 5 acre property
The property is located in an appreciating area outside of Seattle, and within walking distance of the town center. The SFHs surrounding the property are selling for 300k to 400k. Their land's zoning is Residential Medium (6-10 units/ac). They may be able to get higher density rezone as nearby development is 11-14 units/ac.
There are a few unique variables since as of now, their single home sits on all 5 acres. A 70m single driveway (with existing homes on both sides of it) connects to the entire lot (similar to the shape of Oklahoma), which means a proper 2 lane road would have to be developed from the opposite side of the property for access to subdivided lots. This side has a slope (road would need to be scoped/approved by civil engineering firm I believe) whereas the rest of the land (approx 80%) is flat.
From my basic research (Talked to a couple REDs and surveying companies), there seem to be 3 main paths my folks can go:
1. Sell the land as is.
2. Develop it or partner with a developer (most $, most time).
3. Spend some $ on a high level feasibility study to show further evidence of property's value (eg. no wetland, environmental issues, etc), then selling it for more than point #1. Not perfectly clear on the steps of this.
4. Your thoughts!
I've been trying to digest as much RED knowledge as possible lately (no prior exp, but really enjoying it all), and am thinking of helping my parents with their property. As someone who was planning to invest in RE properties myself this year, my parents have asked for my assistance as we both realize this is potentially a bigger opportunity if I spend my efforts and $ on it. I'm leaning toward point #3 above, but would love to hear your thoughts. Time is not an issue at the moment, so we'd be open to #2 as well.
Thanks so much,
Take the Ray Kroc approach, sell the house and lease the land... :-)
4. I'd suggest maybe sell the house with 1/4-1/2 acre lot, keep the remaining land but offer to lease it to the home buyers or another party, and keep it generating income until they really need to sell it. Later they may want to develop it, or sell it to a developer, or separate it into lots and sell the lots. Sounds like it would generate more income by selling as individual lots, or even just holding it longer and selling it as is.
No problem. I'd also say connect and network with some local developers or look at projects that have recently been done and talk to the people that were involved in the project.
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