Buy Vacant Lot in Paradise CA

Member since 2024 · 1 post · 0 votes

Hi all,

I am still new to the real estate investment. I notice there are a lot of vacant lot in Paradise CA which the price is quite appealing. Paradise was impacted due to camp fire on 2018 and is on-going for its recovery. My first thought of the investment plan is buy and hold for 5~10 yeas and sell. Here I have some questions and hope to know if any of friend here have experience on investing vacant lot.

1. Do you buy vacant lot insurance to protect the liability?

2. Do you hold the vacant lot under LLC?

3. Do you usually buy lot to hold and sell or you will build new home to sell?

4. Is buying lot in Paradise CA a good investment idea?

5. Different from buying investment real property, what key things should I be careful for buying vacant land?

Glad to be here and hope to make connection with the community.

Rich Wu

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Alan F.
Flipper/Rehabber · CA · Member since 2023 · 1k+ posts · 1k+ votes
6mo
Quote from @Rich Wu:

Hi all,
I am still new to the real estate investment. I notice there are a lot of vacant lot in Paradise CA which the price is quite appealing. Paradise was impacted due to camp fire on 2018 and is on-going for its recovery. My first thought of the investment plan is buy and hold for 5~10 yeas and sell. Here I have some questions and hope to know if any of friend here have experience on investing vacant lot.
1. Do you buy vacant lot insurance to protect the liability?
2. Do you hold the vacant lot under LLC?
3. Do you usually buy lot to hold and sell or you will build new home to sell?
4. Is buying lot in Paradise CA a good investment idea?
5. Different from buying investment real property, what key things should I be careful for buying vacant land?
Glad to be here and hope to make connection with the community.
Rich Wu
1. If you own it your not required to have insurance, but Id definitely get liability insurance & have conversation with my insurance broker

2. Depends, there's pros & cons. If you're starting out I wouldn't, especially in CA

3. Ive only bought 2, built 2 spec homes. I had a plan with each.

4. No,I its pretty hard to build, when existing is cheaper. If youv a contractor or have some other way to build cheaper it could work. Alot depends on the cost of money, how long your liquidity is tied etc.

5. Zoning, entitlements, building codes, demand for the house, holding costs, insurance, property taxes.

I was in Chico during the fire, love paradise, but i fail to see a path forward for any traditional investing.

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Garrett CrosbyPro Member
Real Estate Agent · Los Angeles, United States · Member since 2021 · 392 posts · 162 votes
4mo
Good questions and Alan covered the mechanics well. I'll add some CA-specific context on a few of these.
On the insurance question: Paradise is in a Very High Fire Hazard Severity Zone (VHFHSZ), which in CA means most private insurers won't touch it. You'd likely need the FAIR Plan for any coverage, and even then the coverage terms and costs are challenging. For vacant land specifically, liability coverage is typically the main need and it's more accessible than homeowners policies, but still get a broker who knows this market before assuming it's available.
On the land hold thesis: the key question for Paradise specifically is what the long-term trajectory of the community looks like. Recovery has been slower than initially projected. Population has not fully returned. That affects the demand side of your eventual exit — who is your buyer in 5-10 years, and at what price? The "recovery play" can work if you get in cheap enough and have the patience, but the hold costs (taxes, time, carrying costs) plus the uncertainty of the recovery timeline need to be modeled carefully. Feel free to DM if you want to think through the numbers.
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