Should I buy the vacant lot next to a Flip house in MA?

24 Replies

(I apologize in advance for the long post)

Some background:

I'm interested in a property as a rehab project located in a seaside town here in Massachusetts.  The average lot size as you get closer to the water is greatly reduced compared to the rest of the town, however property values remain high due to the proximity to the ocean.  The current owner of the home only bought the parcel of land which the home sits on, and not the adjacent vacant ( and "undevelopable" as classified by the town due to not meeting zoning requirements) parcel of land that the previous owner also owned in conjunction with the house parcel.  Each parcel is approximately 1/8 of an acre, however, the undevelopable parcel has a significantly lower assessed value due to its classification.  The vacant lot is basically used as if it was part of the lot with the home on it (driveway on vacant lot), but in fact the owners are different, and legally that isn't allowed.   

Here are my questions:

Should I reach out to the owner of the vacant lot (who lives in Florida full time) and see if they'd be interested in selling it (I honestly don't know what purpose it serves for them)? If they are interested, should I buy that vacant parcel, and if/when I get into the rehab property, sell both parcels together on MLS as part of the house rehab deal? Combined both parcels would only be about 1/4 of an acre, but I'd be doubling the lot size in a tight part of town, and could legally market the property on MLS as having a decent size side yard to potential buyers.

If you don't hate me already for the long post, please keep reading:

If the little vacant parcel is assessed by the town at "X" and it serves no purpose as an undevelopable lot to the current out of state owner, what % of X do you think I should offer them for it? Let's say I proceed with this, should I generally consider this part of my rehab costs? How would I adjust my estimated ARV due to the addition of this parcel to the deal? Lastly, let's say I don't get the extra lot... it's always been "used" as if it were part of the house lot... What would you do?? I'm worried the people from Florida might decide to use it one day as a place to park their RV, or go camping or something weird...

You guys are great, Let me know what you think, much appreciated!

And let me know if this should be posted elsewhere on here!

I am very curious to see what others have to say on this as I am facing a very similar dilemma myself in the Hamptons area of New York. My proposed property is adjacent to a vacant lot that appears undevelopable due to zoning codes (it is only .23 acres). However, the property is very close to the beach and is in a highly profitable real estate location. Buying the lot would double the property size and make room for a pool. Like in Steven's situation, it is privately owned, but is currently being used by neighbors as if it is apart of their property. 

Is there an easement on the parcel without the home? 

 One question I always ask is who has more control over the other? The homeowner or the lot owner? The lot is not buildable but a portion of it is the driveway of the home? What if the lot owner puts up a no trespassing sign? What does the current homeowner know about the lot and the lot owner? Is the lot owner reasonable or hard head? In other words can the lot owner in Florida mess up your future sale or is his lot worthless to anyone but you or the current homeowner. That's what you need to find out. 

Can you upload the plat for review? I will try to help you.

Like Donald just mentioned you should figure out if there is any kind of easement allowing the owners of the other property to use the adjacent lot for that parking.

If there is then buying it will probably just be a waste of money.

However if NOT then I would explore getting it ahead of the other property.  If you own their parking and expanded yard you have more leverage in negotiation for the real target.  You can say that they can't park there anymore and anyone else going to buy it would see that issue and it will be a turn off.

Figure in this situation you can either get it for a better price, if you still can't work it out you can resell it to these people or to whoever does buy it for a profit (need to get it cheap from the current owners, but unless they do something weird like you said they just get to stop paying taxes) or possibly you rent the parking back to them or others. 

@Donald Morrison  Hi, as far as I know, there is not.  All I've been able to find out is that the original deed to the owner 2 sales ago was for 2 parcels, and the current owner's deed was for 1 parcel.  The other parcel is still registered under the previous owner's name with the assessor's office.  Where would I dig up easements if there were any?  They'd have to be recorded somewhere, right?

@Kevin Page   Hello, as of right now I don't have any plans or anything, they're not available as public records online, even though just about everything else is...  I suppose I could go to the registry and try to dig up the lot plans.  I have lot ID #'s from the town assessor and can get Deed Book/Page #'s from the County Registry - do either of these help?  I'd prefer to PM them to you at this point in time if you can help!

Also, I should have mentioned, in case it's relevant, that this vacant property was served an instrument of taking by the town at one point in time (in MA this can happen apparently if the land has a value under a certain amount) before it was later granted a certificate of redemption when the owner finally paid their taxes and penalties a year later.  To me that shows that they had "lost track" of the property.

@Shaun Reilly   I had thought of more general versions of your scenarios (being a newbie and all), but I thought I was being a little crazy... I like it!

@Steven Tierney   Keep digging. You need to find the story behind the lot and figure out if it is worth anything to you and whether you need it or not. Don't worry about the plat.

@Steven Tierney  the easement issue would be the first question I would find out.  you can determine this at the register of deeds office some cities have this available online you just need the parcel id.  Since the lot can not be built on I would assume it has very little value.  I would check into the option of a varience to see if you could build on it as well.  I would also assume this property is not land locked?  

I would find some comps that have a similar lot sizes with adding the adjacent lot. Determine if it adds any value at all.  Say if it adds 50k in value offer the owner 15k and add 25k or so to your asking price. This is all theory you must justify with reasonable comps in your area.  The numbers don't lie!  My point is if you can't buy it at 20-30% of the value I would pass. I would assume you would not make much money with the land but I am sure it will appeal to the back end buyer by having a larger lot.

Hope that helps good luck

If "your" property doesn't have a driveway and you are using the other land for access then you probably are copying the previous owner, who also copied the previous owner, etc, and you might have an easement. I would just ask. The parcels were probably sold together as keeping the "undevelopable" one wouldn't serve a purpose.

Can you do anything with the extra land? that's the question.

Also, google "adverse possession." It's a long shot but why not look.

@Steven Tierney  I do this stuff as a Civil Engineer, so I'll try to give the cliff notes version of how to research. This may not be exact since I do it out here in CA, but the general steps should be correct, you just need to find out which office has each item.

This is assuming of course you decide to search for an easement instead of purchase ect.

1) Easements are shown on the title report(not just an O&E report but an actual title report), so order one for the lot next door and see if anything shows up. Many easements are "non-plottable" meaning they don't have a given course that you can plot on a map and say "it is right here". An example would be an electric utility pole that has a 3' easement on all sides, well if the pole is move then the easement moves with it. I would imagine this driveway (if it has an easement) may also have a general easement like that. Those usually show up in a different section of the title report from plottable easements that have a fixed location based on a surveyed course. 

2) If it's on the title report go pull that book/page # and you have your easement document, along with any drawing or exhibit that identifies it.

3) If it doesn't show up, that doesn't mean something isn't recorded. We get title reports all the time that are "missing" old easements. It's not a big deal, when we find the old document we provide it to the title company and they update the report. To find it there are 2-3 places to look.

1. Go to the county and search for records (those same book/page indexes) for the lot's parcel number. This should give anything recorded against the lot. You'll have to view each item and see if any of them have what you need.

2. Go to the City and look through their files there. The City has the old plans and permits that were pulled, so here you'd be looking for a plan that maybe built the home and shows the driveway. Sometimes the easement was placed on that plan, but not recorded with the County like it should have.

3. Again at the City they have the record maps. The maps would have been done anytime someone subdivided up land. So maybe a map was done when they separated the lots for the last purchase. Again the driveway easement may have been shown on there and just never recorded with the county. 

4) Assuming nothing is shown on any of those then no "legal" easement exists currently. That doesn't mean that it doesn't "actually" exist. If the driveway predated the sale of the home separate from the lot it is on, an "assumed" access easement may be in place. What I mean is the previous owner sold knowing that the driveway was there and proceeded with the sale anyway in essence "granting" the buyer a right to park there. So you could ask to record an easement today and see if the lot owner will cooperate. If not then talk to a local RE attorney and see what would be needed to establish your right to the driveway. Like I said the right may have been "granted" due to the circumstances of the sale, and the RE attorney can help with what may be required to formalize the right through paperwork. This can be done without the cooperation of the lot owner. Since they allowed the sale, and it was "open and notorious" in nature they have in essence already shown that it is allowable and now you would just be solidifying that through filing paperwork.

Hope that helps and let me know if you need any more ideas on how to proceed.

@Steven Tierney  one other thing to add I forgot consider having a local land planner look at the parcel to see if he can figure an angle on a possible variance.  If the property is close to meeting the requirements for your town they will more than likely allow it. Reason is a new home will bring more tax revenue than a lot that is at this point not buildable.  Also I am not sure of the lot size of the rehab property but maybe a combine then re divide might work.  It is hard to answer this question exactly without a lot of missing info.  In short get a land planner throw him a few beans and figure out your options. 

@Joshua Houchins  Hi - the lot is not landlocked, it has less frontage than the required amount and the setback requirements in the zoning district when offset from the property line leave no buildable area.

@Donald Morrison  Thanks for the suggestion regarding past history/use, I'm going to look into that.  For now, I'm learning a lot digging around on the County Registry myself, if I can't figure something out I'll definitely reach out - thanks!

@Matt Devincenzo  Wow, thanks very much for the thorough explanation.  BTW, I work with a dozen or so site devleopment civil engineers in my office on a daily basis - a good bunch of people!

If I find anything else out, or if not, I'll post again...

Do you know how long the driveway has been used? If it has been 20 years, the home owner has the right to continue using it. It's called an easement by prescription. 

Generally when you double the size of the lot, you won't double the value of the land, but that's a generalization. It's tough to estimate without knowing your market. 

I would look for comparable home in the area that sold with a large lot and interview the agents to see whether or not it had an impact on value.

Or you could always contact a local appraiser and get their opinion.

I wouldn't risk buying the lot first and using it as leverage, I can see that backfiring.

Best of luck!

Well, so I googled and found the vacant lot owner's phone #...  Gotta love the Internet!  I left a message with the son and I'm waiting for a call back.  @Paul Crawford   this would be something I would negotiate after closing on the house lot... If it's even worth it.  Still nice to know if the owner is even open to selling it, just in case...  

The undevelopable lot is assessed at $18k, so what would a reasonable offer be do you all think?  All highly speculative, but hey, it's fun!

$6k, if that.

This depends entirely on how much value it will add to the home. 

Also, who is your end buyer? An investor who will rent the home out or a property owner? The lot probably has little value to the investor, since it will increase taxes but it is less likely to increase rents. 

Can the lot be used to construct a garage? Does the home have a garage? Lots of variables at play.

Generally the contributory value of the lot is 20-35% of the total value of the home. So, if the home's ARV is $100K, the value of the land might be $30,000 and the value of the home might be $70,000. In this case, I doubt if the neighboring lot would add more that $10K. But that's hugely speculative.

Like I said before, find a home on a double lot that sold, and speak with the listing agent and buyer's agent to see if it had an effect on value. As an appraiser, that's one of the steps I would take if I was uncertain.

Originally posted by @Joshua Houchins :

@Steven Tierney  one other thing to add I forgot consider having a local land planner look at the parcel to see if he can figure an angle on a possible variance.  If the property is close to meeting the requirements for your town they will more than likely allow it. 

This is exactly right... Check with the zoning or building permit department and see if there has been a precedent for building variances on similar sized lots in your city.

Coming from a buyer's perspective, knowing that you own the adjacent land is much more attractive versus not knowing what will happen to it down the line (zoning changes, lots grow weeds and attract trouble).  There have been instances in Colorado of extended usage of adjacent land giving the user legal claim over the property, it would be interesting to investigate what the rules are on an "assumed" easement and if that gives the owners some claim to the lot.  If it's not going to kill your numbers I see it as an advantage to control both.

Someone above mentioned adverse possession. This is similar to squatter's rights. (Google it for more information, and I am not an attorney, blah blah blah.) If you have a driveway on the lot that is being used by the homeowners, it fits one of the main components of proving adverse possession, which is proof of non-permissive use that is open, actual and notorious. It must be used for 20 years in CO, so check with your local statutes. There is a rather famous case in Boulder, CO where a lawyer/judge couple used a portion of a neighbor's property for years. The neighbor thought he was just being nice, and when he asked them to stop, they threw an adverse possession deal at him and he was legally bound to title that portion of the property to the lawyer/judge couple. 

Back to your original question, I agree with whomever asked about the end user. If you are flipping the house to sell to an owner/occupant, having the extra yard in an area that typically doesn't not have yard is only a bonus. If your end buyer will rent it out, it may or may not be a feature they are looking at. You could always acquire the lot and offer it as part of the sale if they want?

As for purchasing the lot from its current owners, I would dig into how much they paid for it. Offer at least that much. Tell them what you are doing and why, but I wouldn't purchase it until you own the flip next door. Good luck!

The difficulty with the entire scheme is that seeing a vacant, under-utilized parcel becomes a "shiny object" for the would-be real estate buyer who devotes way too much time to a less-than-ideal opportunity.

I was drawn to this thread by the term adverse possession, which fir which there are two types:

1) Color of title - for which title to real property is obtained by way of a defective document which, on its face, appears to transfer title. This may include an out-if-chain document.

2) Claim of Right - this is the 'squatter's rights' method of obtaining title to real estate, originally intended to put fallow agricultural fields to productive use.

Both forms of acquisition should be considered the "tools of last resort" and require a minimum of five elements, including the payment of property taxes as well as trespassing.

Back to vacant lot:

Last weekend a friend invited me to visit her project - a house that she's building on Newport Beach, CA's pricey Lido Isle. Since few properties come in the market, she was delighted to buy an older home with an even more rare double lot. 

She's a shrewd business person, having built an empire in the retail fashion industry. I was impressed that, rather than building another monster size home, she elected to build in the single lot, electing to land-bank the other. 

Perhaps land banking is the motive of an owner who resides in Florida and owns real estate in the Hamotons?

Originally posted by @Rick H. :

..."shiny object" for the would-be real estate buyer who devotes way too much time to a less-than-ideal opportunity...

Well said sir!  I'm a newbie so thanks for setting me straight a little bit.

If it were me I would simply go down to the planning/zoning office and talk to someone about it's highest and best use... Figure out if he/she is aware of another angle you haven't thought of, for example, if you owned both the vacant lot and the home, could it be re-subdivided or rezoned for a multi-family or 2 useable lots? I've had good luck with talking directly in person and not over the phone to planning and zoning vs trying to go it alone without their input... I was told once over the phone my property couldn't be used as an elder care facility... I went down to zoning, and the guy pointed out a rare loophole and I was able to get my use permit to use it as an elder care facility finally! Never would have happened without his expert knowledge of the local zoning laws...

I've seen similar situations where the lots had been merged (which many towns like to do) and therefore it appeared that only the main (house) lot was last sold, but in fact that sale effectively included the extra lot, which was not properly recorded/updated.  You never know.  In any case, sounds like it's absolutely worth your time to figure out all the details.  Could be a real opportunity, even if there is nothing more you can do than the driveway for now, you or a new buyer could maybe do more in the future should zoning rules change or more flexible administrations run the town/county.  May even be worth throwing a few dollars to an appraiser and title agency who can help you figure out value and specifics around the ownership, easements, etc.  

I know that this is a very old thread, but I was wondering if the original poster ever did find out the information that you were looking for about this lot of land? This sounds eerily similar to the exact kind of information that I am finding out about the property that I just purchased in June 2016, in Mass. 

There is an adjacent parcel of land (not included in my deed) that is being used as a driveway by the owner of the house behind me. According to the other homeowner, he knows the owners of the parcel, and has verbal agreements with them that he can use the land.

Would it be worth my while to try to acquire this piece of land? 

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