Property in middle of future development

13 Replies

So, 12 years ago I bought these 2 vacant lots . There had been whisperings of future developments for years, that hadn't come together. 

NOW, they're planning a 320 acre mixed-use development that's been announced and I have these 2 lots smack dab in the middle of everything. The city it's in owns most of the parcels and have been buying off others the past few years. I once offered them to buy mine for 100k and they laughed at me. 

Well, They're breaking ground this fall and are expected to create +1,000,000 sqf of space, retail, hotel, office, residential. 

What's the best way to go about maximizing my sales price. I'm no longer willing to sell for 100K now, as they took their time. 

@Jay Hinrichs , I believe you've dealt with property close to development. What advice can you give me? I know there'll be a time soon when they'll want (need) to buy those lots.  How do I set myself up ahead of time, so that I'm in a good spot when it happens?

Originally posted by @Jay Hinrichs :

don't get too greedy for one..  do they really need your lots. ?

 Well, they could change the design that's been announced. But I could also keep those 2 lots and wait for everything to get rezoned and then sell those lots to an independant buyer once all of the construction is done, which would increase the value. 

I do have road frontage, so they can't landlock me. It's a 500M development

Originally posted by @Michaela G. :

I do have road frontage, so they can't landlock me. It's a 500M development

 well unless they have approached you they probably don't need you .

its just like the 4 acres I own next to the largest casino on N CA  that they just spend 400 million building.

I am zoned multi use resi commercial but until I have a user .. no joy..  I have it on the market for 3 mil .

in development you have no value until you have a user.. unless your going to develop it yourself.

and if its just two residential size lots those would have very little value unless they were needed for a greater good.

I guess, I'll see. My lots are where they're planning a 28,000sqf grocery store. Not next to it - the grocery store would be on top of my lots

I have a friend who owns significant property on the outskirt of metro DFW.  He has close to 1000 acres.  Part of his development has what we refer to as the donut.  It is about 10 acres surrounded by his development on all sides.  Now the guy who owns the donut hole thinks he has a great property and has it over priced.  He could build a road to get into his property, which would make it worthless.  My friend has offered to buy it at a reasonable price, but the seller is very greedy.  My friend keeps adding tracts around it, but not contiguous to it.  He can build for 5 years without tying it in.  Dont be greedy is my advice.

Mark

Just a little update. An agent for the developer contacted me on Friday for purchase. I told her to make an offer I can't refuse. She wanted to meet with me, I told her that I don't want to waste my time, because they're probably going to make a low-ball offer and that I'd be happy to keep it for years to come, have them build all around me and then I'll develop my own lots. 

We went back and forth until she wrote "I told you that the interested buyer is who you've been waiting for for 12 years. Just name your price!"

They wanted me to blink first and I didn't want to. 

So, I've now got a commercial appraiser involved, that I've used before when I owned a lot that the city tried to take by condemnation. This guy came to the hearing and testified and ran circles around the city's appraiser. It was a beauty to watch. City offered 22K, I ended up getting 92K. 

Anyway, I did inform her that I have an appraiser looking at it, but she doesn't know that the one I'm working with is really a 'secret weapon'. He's using the plans of their development and assemblage value etc to come up with a value. 

Hoping to hear back by end of the week. 

They're planning to break ground in November. 

To clarify: It's a total of 320 acres and they're now shooting for a density of 10M sqf of retail and office and residential. Mine are in the retail section. 

This neighborhood used to be full of houses. All the infrastructure of streets etc is in place. They started buying in the 90's and tore down all of the houses. So, when I'm saying that I'm 'in the middle' of everything, that doesn't mean that I have some landlocked parcel, but that both parcels have road frontage on a street in the middle of the development. 

Even with your secret weapon, make sure money isnt your controlling decision maker. I've seen too many people think they can get top dollar, even with an appraisal, and still are sitting on it for years. Unless someone NEEDS your lots then there is no rush to buy them. They have years of development before they start to "run out" and your start to look more enticing. I know you said you're willing to sit on it but you also have to look at how much you'll loose out in investments if you sit on it another 10 years. So unless you can find out what exactly the details are that they have planned for your property then you really dont have a secret weapon. Because they have a number in their head and really dont care what your appraiser says. 

Also unless you are prepared to or have the resources to development it yourself I wouldn't hold out for the highest possible number. If I where you, I would consider developing it myself. Reason being is you have a TON of equity in those pieces now with what I'm sure the appraisal will only increase more. Thats great leverage to get construction loans and thus no need for a large down payment. 

Originally posted by @Nik Moushon :

 So unless you can find out what exactly the details are that they have planned for your property then you really dont have a secret weapon. Because they have a number in their head and really dont care what your appraiser says.

We know what's planned for the property. The whole plan has been made public. They've increased density and it's now closer to $ 1B development. A 28,000sqf grocery store is going to be on top of my lots. 

Do they need my lots? Well, they could redesign things and make the store a 'U' shape and less sqf or they could spend another 100K , or whatever it costs, to redesign the whole plan. But in that case they'd be dealing with a nightmare in some way, as they'd either have to totally change their plans or would have to deal with a potential future store or whatever in  front of their store, when they have no control. We've all seen those pictures of that  development , where this little old lady didn't want to sell and then they build around her old house. I don't think that's the 1st choice of any developer. 

If I don't want to sell, their alternative is to condemn. But in that case they're still required to pay me market price. Of course, they'll have their appraiser state that market price is one thing and my appraiser will show that it's something different. They can't just take the property. So, getting an appraisal on actual commercial value is going to help me either way. We can go to court, if that's what they want to do, and this appraiser is regularly testifying in court (most appraisers won't). I've been there before and learned a ton. But that would cost them a lot of money and would be a hold-up for them and in the end they'd still have to pay me the real market value. 

My appraiser is not lying or making up numbers. But he's not one of the normal appraisers that appraises residential properties. Last time his fee was $ 300/hour, t's probably more now,  and it was so worthwhile. He often works for the government and is considered a neutral witness in court. 

Until my condemnation, I had no idea there were other appraiser, than the typical residential real estate appraisers that I'd dealt with before. 

I miss read that they had already designed with your lots in consideration. I thought when you said "on top of my lots" I read it as right next to it lol. Not sure why but I guess that what my brain does on my third Monday of the week. 

I think you're setting yourself up for a good fight over price lol. Best of luck. 

So, they're still low balling us. That's fine. I've waited 12 years, I can wait some more. As long as my consultant is in the middle, I'm good. He does the communication. And he says that they can bluff that they can build around me, but that they really can't. They're planning to widen the road and put new infrastructure in and they'll need my pieces for that. 

Yesterday it came out that they're now possibly proposing the site for a future casino, if the Georgia legislature approves 3 casino/gambling sites for Georgia at the next session. That would be huge. 

Originally posted by @Michaela G. :

So, they're still low balling us. That's fine. I've waited 12 years, I can wait some more. As long as my consultant is in the middle, I'm good. He does the communication. And he says that they can bluff that they can build around me, but that they really can't. They're planning to widen the road and put new infrastructure in and they'll need my pieces for that. 

Yesterday it came out that they're now possibly proposing the site for a future casino, if the Georgia legislature approves 3 casino/gambling sites for Georgia at the next session. That would be huge. 

 Curious how the cards fell for this deal!

Still the same. They've bought a lot more in the past 2 years, even paid 350k for one piece. Huh! I'm staying on top of the sales. Covid came and I know the city is cash strapped, due to the Airport having slowed down. But they have contracts on some of the pieces from developers and they're working on the infrastructure. So, it'll happen. I can wait. 

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