Inherited lots on Cedar Creek Lake

7 Replies

Hello BP-ers, 

My in-laws currently own 4 lots about 1/4 acre each in Tool, TX on Cedar Creek Lake (not on the lake, but walking distance to the lake). The area is called Paradise Bay. 

The lots mean very little to them and they have just been sitting, paying taxes and mowing fees for the last 20-30 years. The area is not high value or anything to write home about, however, they are willing to gift them to us if we want them. 

We do all of our business in central Arkansas, but currently we live in Dallas/Ft. Worth area (approx. 1.5 hours from Cedar Creek Lake). So, doing something with these properties wouldn't be too difficult. I believe the area they are in now has a 1500 sq. foot minimum to build on. The houses around are generally occupied by local residents and are worth a varying range of $60k-$300k (houses on the lake are obviously the higher end)

Our options are:

#1. Take the gift of some/all lots and build long-term or short-term rentals (bearing in mind that we have only experience in long-term...zero experience in short-term rentals)

-  We would have to have some sort of partner with this deal since we have no cash to build 

- There are not a ton of rentals in the area, so I'm not currently sure of how much a long-term could even rent for. I've seen some 3/2 SFH's approx 1,400 sqft renting for $925-$1,000/month.

#2. Take the gift of some/all lots and build houses to turn around and sell

#3. Take the gift of some/all lots, leave them the way they are, and resell them

#4. Turn down the gift

#5. Another option that I haven't thought about...yet

So guys/gals... if you were in our position with very little cash, what would you do? 

Thanks!!!

Zac

Have you looked them up to see what they are worth?  

You could partner with a contractor.  They use the land for free, they build the house, you split the profits in whatever percentage fits.  So you are financing the land, they are financing the build.  

You could put up a FSBO with 'possible owner financing' sign on them. Sit back and collect $200 or so per month. Again, you can collect a down payment of $1,500 or whatever depending on what they are worth.

Or just call a real estate agent and have the agent sell them. No work for you, cash in your pocket.

Before you decide, you may want to double check that rentals are allowed in the neighborhood the properties are in. Sometimes HOA's ban them.

Many of the areas out there are used for fish camps and low end mobile homes.  My guess is you would be able to sell them with seller financing in the $3000-5000 range with $500 down if a water line is accessible

I don't know the area, but curiosity got the best of me and with a bit of research it looks like there may be a few short term rentals there:

https://www.airbnb.com/s/Tool--TX/homes

Maybe book one of them for the weekend to get a feel for the business model from the short term tenant's POV and take notes on how it is set up and run. If you can find one of the owners of those generous enough to share more details, then you could learn more about it that way. And, if there is a PM in the area specializing in short term rentals, they could be a good source of info, though they would be biased so I'd try to validate as much of the info you get from them as you could.

If you do go this route, I'd first test it out on building out one lot only, and if it goes well then you could build out the others. I'd also want to know that if I built out the lot, I could sell the property for profit if the short term rental strategy did not work out as hoped for. You want to maintain multiple profitable exit strategies to hedge your risk. Good luck!

I really appreciate the advice from everyone. There are definitely some good ideas in this forum. I'm glad I posted this. We are going to do some more research to see how much the lots are worth by themselves and then make an educated decision. I'd hate to not at least take free land and do something with it if there is any potential profits or good deeds that we could make out of them. 

Thanks again!

-Zac