How to hit a home run with empty city lot

14 Replies

Hi everyone! I am seeking advice on what to do with the empty lot I was gifted when investing in my first house hack duplex. I have owned the property since 2015 and it has been a great cash flow. We are closing on another property this week and I keep thinking in the back of my head. Buy more properties? Or build a multi family on that lot. Currently my portfolio consists of the duplex, the single family home w/ guest house we are closing on Friday, and our primary residence which is a SF 3/2. We like the buy and hold and think we are in a pretty good market. I am working a full time job and raising a family. Looking to reach financial freedom and wondering how to hit a home run with that empty lot. Thanks!

I think it would help, if we knew which market you're in. 

Typically, can vary in markets, a vacant infill lot is worth about 1/4 to 1/3 of a newly built house. So, a lot will depend on the prices in that neighborhood, whether it's worth it to build

What's the zoning? 

Are you allowed to build a multi-family? If it's zoned single family, you can't build multi

Are you talking 2-4 or 5 and more units? 2-4is residential, 5 or more commercial

Are there other MF in the area ? If not, you'll have a hard time refinancing as there won't be comps. 

Are there new constructions in your area? How much did they sell for? Those would be your comps. 

Sure, you might say that you don't ever want to refinance or sell, but you never know what happens and if you end up putting all your funds into something that you can't sell - it might hurt you later. 

Don t know your area,    but here there's no general residential zoning. Residential neighnorhoods are zoned for sfh or duplexes etc.

My neighborhood has a lot of duplexes, which used to he zoned for that. Zoning changed to sfh in 2005 and those duplexes are now grandfathered in. But I wouldn't be able to build a new duplex.

Roadfrontage is also very important. If current zoning requires 60' road frontage and your lot only has 50....the. That's a problem.

I'm not trying to be negative.....just that you should find out what exactly you'd be allowed to build on the lot before you get too far into your plans.

If you spend 200k to build a duplex and you can buy a duplex for 100k....then it probably wouldn't be a good move to build at this time.

No I defiantly understand.

And I can buy a duplex for that much and it would probably cost me 180k to build one.

I need to go onto the county website will that tell me the regulations?

Also general question will there be a point in the market where new construction would be cheaper?

Your market needs to go up before it's worth building.

In my neighborhood in Atlanta, the county website still states our zoning ad R5...instead of the R4b, which it changed to in 2005. So don't totally trust it.

But I'd say that it's really moot of you can buy a duplex for half of new construction.

Originally posted by @Michaela G. :

Don t know your area,    but here there's no general residential zoning. Residential neighnorhoods are zoned for sfh or duplexes etc.

My neighborhood has a lot of duplexes, which used to he zoned for that. Zoning changed to sfh in 2005 and those duplexes are now grandfathered in. But I wouldn't be able to build a new duplex.

Roadfrontage is also very important. If current zoning requires 60' road frontage and your lot only has 50....the. That's a problem.

The neighborhood is zoned R-6. So I found on the county website this...

R-6 These districts exist for the protection of areas that (General Residential District) generally contain older residential structures, some of which were originally large single family dwellings which have been or may be converted to rooming houses or multi-family dwellings, and others which have been built on relatively small lots. Accordingly, the use of land and buildings within these areas is limited in general to dwellings at a density of around ten dwelling units per acre, and to such nonresidential uses as generally support and harmonize with a medium-high residential density.

Looks like it's zoned for mf then. But again, if you can buy a duplex for less than you can build it, I would not consider building. You'd have a hard time getting a loan or you'd tie up a lot of cash that you can't pull out anytime soon.

Currently building new is still running about 20-25% of existing depending on the market. Even in the best of markets, new construction will always be a premium typically 15%.

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