I know of a run down area with single family homes that the city will likely change to High Density Residential. Is the city trying to get a developer to go in and create nicer town houses? or apartments? Would it be a good idea to buy up some houses and wait to get bought out? or even build my own multifamilies when the neighborhood turns? Is land worth more when it gets re-zoned to accommodate High Density properties?
@Kevin Hobbs you may have either stumbled on a multimillion dollar opportunity, or a multi-year headache ending in bankruptcy. Land development is a high stakes game because it has so many moving parts and contingencies (discretionary processes like planning commissions and city councils, environmental challenges or community opposition, financing, etc.), which is why there is so much potential to make huge margins if everything goes the way you want it. The challenge is that not everything is within your control.
That being said, development has always been a passion of mine, having consulted for some of the largest retailers, residential developers, working as a local city planning manager, and as a real estate attorney. So in no way do I mean to discourage you, but instead want to offer one approach you might take to hedge your risk a little.
It very well might be that the city wants to up-zone or add healthy density to a particular area given its proximity to transit, a city center, or other strategically planned growth area. I would further research with a competent planner at the local jurisdiction and see how this neighborhood fits into the larger picture. Who controls the land around it? Are they moving on plans as well? What is the timing? Are there significant off site or infrastructure requirements mandated as a result of the change in use and density? What is the highest and best use?
Once you know that information, I would approach the owner. Look for ways to control the land with using as little of your capital as possible. Are they open to a JV? Would they give you an option until you get the land entitled?
Best of luck.
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