Vacant lot in booming data center town
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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@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?