Vacant lot in booming data center town

Dallas, Texas
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Vacant lot in booming data center town

Katherine Chastain
Investor · Brownwood, TX · Member since 2016 · 5 posts · 1 vote

So I purchased a double lot just outside of Abilene Texas. Which has a data center being built and after that a solar/energy farm going in. Abilene itself has been a growing market but since the data center started its construction five months ago I have been getting constant offers to purchase my lots.

Now I am currently living 3 .5 hours from this location and the double lot is in a small subdivision of almost all manufactured homes. But it is in a small town of tye just above a military base and off interstate for commuting. The town itself is small and quaint and just outside Abilene but with country living. It has utilities already in place from previous home on location.

HERE is my question. Do I bother with the whole thing of getting a manufactured home out on the property and landlord it from afar or do I just sale it for a major profit.

It seems like a headache and a bit of money upfront to get a home on there but the market will have that thing paid for in 2-3 years with conservative numbers vs short term financial gain and pay off all remaining debt and live more comfortably now until I purchase another rental.

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Amir Twig
Investor · Miami, FL · Member since 2023 · 91 posts · 28 votes
6d

@Katherine Chastain Ashish and Shaked covered the framework well, so I'll just put rough numbers on the "paid off in 2-3 years" part, since that's what the whole decision hinges on.

Say the manufactured home is ~$100k all-in once it's delivered, set, skirted and hooked up. If it rents for ~$1,400 (check what 3/2s actually get in Tye) and you lose 35-40% to taxes, insurance, vacancy, repairs and a manager, you net roughly $10k/yr. That's closer to a 10-year payback than 2-3, so it's worth knowing which number you were working from.

The other thing I'd weigh is where the demand is coming from. A data center build brings a big wave of temporary construction workers, but the finished facility employs relatively few people. Land offers and rents near these projects tend to spike during the build and cool after. Your steady long-term renter pool in Tye is more likely Dyess than the data center, which argues for pricing a sale off today's offers while they're hot.

And if you do sell but would rather keep building a rental portfolio than pay off debt, a 1031 into a property closer to home defers the gain.

What were you assuming for the home cost and rent when you got to 2-3 years?

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  • LaTarence Dunbar
    Lender · Washington DC · Member since 2026 · 61 posts · 15 votes
    1w

    That’s an interesting situation, especially with the development happening around Tye. I’d personally look at the numbers before deciding between selling and putting a manufactured home on it. I’m actually interested in opportunities in that area and would be open to discussing the lot directly with you if you’re considering a sale or bringing in a partner. Feel free to DM me and we can look at the numbers together.

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  • Shaked Zemach
    Flipper/Rehabber · DFW · Member since 2026 · 8 posts · 0 votes
    6d

    Hey Katherine,


    This really comes down to comparing your net proceeds from selling today (sale price minus any debt payoff on the property) vs. the NPV of your rental cash flow over a longer hold — say 5-7 years — plus the land's value if you sold it at the end of that period.

    I'm guessing you're planning to fund the manufactured home with cash/equity rather than financing, given how fast that 2-3 year payback sounds — is that right?

    A couple other things worth pinning down:
    - Are you planning to use a property management company given you're 3.5 hours away? If so, did that cost get factored into your 2-3 year payback number? That's often the piece that gets missed and can stretch the timeline more than people expect.
    - Is there still debt on the land itself, or is that already paid off?

    Bottom line: if the NPV of that rental cash flow (discounted at whatever return your equity could earn elsewhere) comes out higher than your net proceeds from selling today, the rental route is the better move financially — even with the extra hassle. If it's close or lower, the simplicity and immediate debt payoff from selling probably wins.

    Either way, the utilities already being in place from the old home is a nice head start if you do go the manufactured home route.

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  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
    6d

    Katherine, I’d compare the decision as sell the land today versus turn the land into an income-producing asset, not just “profit now versus rent later.”

    Since you’re getting repeated offers after the data center construction started, the first thing I’d want to understand is what the lots are actually worth today and whether those offers reflect a temporary surge in demand or a more durable change in the area.

    If you add a manufactured home, I’d underwrite the full project cost: home purchase, delivery, site prep, foundation or tie-downs, utilities, permits, insurance, property taxes, maintenance, vacancy, management, and your travel/time since you live about 3.5 hours away. Then compare the stabilized cash flow to the net proceeds you could get by selling now.

    From the tax side, the two paths are very different. If you sell the vacant land, the gain may qualify for capital-gain treatment if it has been held for investment. And if you sell on terms rather than taking all cash at closing, an installment sale may be worth considering because unimproved land can potentially be sold using the installment method, allowing gain to be recognized as payments are received rather than all at once.

    If you improve the lot and place a manufactured home into rental service, then depreciation becomes part of the picture too, but I’d still want the rental economics to work without relying on tax benefits.

    Given the strong inbound interest, I’d get a few real offers in writing and compare the after-tax sale proceeds against the projected after-tax return from developing and holding.

    Feel free to DM me, I’d be happy to send over a few resources that might help you compare the sale versus rental paths.

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  • Amir Twig
    Investor · Miami, FL · Member since 2023 · 91 posts · 28 votes
    6d

    @Katherine Chastain Ashish and Shaked covered the framework well, so I'll just put rough numbers on the "paid off in 2-3 years" part, since that's what the whole decision hinges on.

    Say the manufactured home is ~$100k all-in once it's delivered, set, skirted and hooked up. If it rents for ~$1,400 (check what 3/2s actually get in Tye) and you lose 35-40% to taxes, insurance, vacancy, repairs and a manager, you net roughly $10k/yr. That's closer to a 10-year payback than 2-3, so it's worth knowing which number you were working from.

    The other thing I'd weigh is where the demand is coming from. A data center build brings a big wave of temporary construction workers, but the finished facility employs relatively few people. Land offers and rents near these projects tend to spike during the build and cool after. Your steady long-term renter pool in Tye is more likely Dyess than the data center, which argues for pricing a sale off today's offers while they're hot.

    And if you do sell but would rather keep building a rental portfolio than pay off debt, a 1031 into a property closer to home defers the gain.

    What were you assuming for the home cost and rent when you got to 2-3 years?

    1Reply
    • Katherine Chastain
      OP
      Investor · Brownwood, TX · Member since 2016 · 5 posts · 1 vote
      4d

      Yes after talking about the pros vs cons on a 5-10 year portfolio plan I realized my goals had shifted. Spot on answer thank you!

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