Looking for ideas and experience with property development
Investor · Cartersville, GA · Member since 2015 · 34 posts · 2 votes
Looking for ideas and experience with an 11-acre development property
I own approximately 11.9 acres in Georgia, including the land my house sits on. I plan to keep the house and roughly half an acre, leaving an estimated 11.4 acres that could be developed or sold. The property is zoned MR-1.
I’ve put together a preliminary concept for 16 pairs of patio homes, or 32 units, accounting for the creek, floodplain, and wetlands. It is not an approved site plan or a confirmed unit count.
I know there are flatter, simpler sites. This land came with my house, and the zoning was already in place. Financing has been a challenge because I need an experienced developer involved to move the project forward.
I’m open to any thoughts or ideas, especially from anyone who has worked on something similar. What possibilities do you see for the land? How would you approach developing it, finding the right partner, or evaluating a sale?
I’m also open to selling the land beyond the house parcel. The acreage available would be subject to survey and subdivision.
Hi Teresia, one thing worth flagging before you pick a direction, since it can move your net proceeds more than people expect: the tax treatment isn't the same across your options, and it's worth asking a CPA about early.
If you sell the land roughly as-is, the gain is usually long-term capital gain. But once you start subdividing and actively selling off lots, the IRS can treat you as a dealer, and that flips the profit to ordinary income with self-employment tax on top. Same acreage, very different check at the end. Where you land between the two depends on how involved you get in the actual development, and it's a facts-and-circumstances call, so it's worth pinning down before you commit to a path.
The other thing worth looking into is contributing the land into a partnership or LLC if you bring in a developer, rather than selling to them. That generally isn't a taxable event the way an outright sale is, so you're not paying tax on paper gains before you've seen a dollar. Whether it beats a sale depends on the deal, but it's a fair question to put to whoever runs your numbers.
For what it's worth, I'm a CPA who works in real estate, so this is just the lens I tend to notice first. Sounds like a great piece of land to have options on.
Hi Teresia, one thing worth flagging before you pick a direction, since it can move your net proceeds more than people expect: the tax treatment isn't the same across your options, and it's worth asking a CPA about early.
If you sell the land roughly as-is, the gain is usually long-term capital gain. But once you start subdividing and actively selling off lots, the IRS can treat you as a dealer, and that flips the profit to ordinary income with self-employment tax on top. Same acreage, very different check at the end. Where you land between the two depends on how involved you get in the actual development, and it's a facts-and-circumstances call, so it's worth pinning down before you commit to a path.
The other thing worth looking into is contributing the land into a partnership or LLC if you bring in a developer, rather than selling to them. That generally isn't a taxable event the way an outright sale is, so you're not paying tax on paper gains before you've seen a dollar. Whether it beats a sale depends on the deal, but it's a fair question to put to whoever runs your numbers.
For what it's worth, I'm a CPA who works in real estate, so this is just the lens I tend to notice first. Sounds like a great piece of land to have options on.
Kasing — the dealer-vs-capital-gains point is really helpful, and honestly not something I'd fully thought through. It makes sense that actively subdividing and selling lots myself could flip the whole thing to ordinary income plus self-employment tax, versus a cleaner long-term gain if I sell closer to as-is. I'm going to get my CPA involved early like you suggested, before I lock in a direction. The partnership/LLC contribution route is especially interesting — putting the land into an entity with a developer rather than selling outright, so I'm not taxed on paper gains before any real money comes in, and the developer's incentives line up with mine. That might solve my financing problem and the tax problem at the same time. Appreciate you flagging it.
in the work you have done so far have you found what would need to happen to make the lots buildable? First thought I had was to do the work to get the utilities etc to the lots, separate the lots and then sell to a custom or smaller builder in your area. Are their boutique builders that already like that area? to your point though for the proceeds youd get from that really outweighs what you'd get just selling it to someone who wants to put their own custom home on it?
Michael — good questions, and the news is better than you'd expect on the horizontal side: utilities are already in the street on both the north and south sides of the property, so I'm not looking at running mains a long way to reach it. The real challenge is the floodplain. Part of the site needs to be raised about two feet above base flood elevation, which means getting the Army Corps of Engineers involved for approval, and I've had preliminary talks with an engineer about using pervious fill so that raising the pad doesn't just push water downstream. Not an approved plan yet — but I know the path.
So honestly, what this needs may be less a typical local builder and more a developer with vision who's actually worked this kind of topography — the Louisiana, Texas, or Florida folks who build on floodplain and know how to engineer around it. Your finished-lots-to-a-smaller-builder idea could still be the exit on the back end; the piece I'm really after is a partner who's handled flood-prone ground before and can see what it could become.
@Teresia M. , hi. I’d first get the property far enough through due diligence that a developer can properly underwrite it. With the creek, floodplain and wetlands, the 32-unit concept is a good starting point, but the real question is usable density, utilities, access and sitework costs.
I'd compare three options: sell as-is after subdividing the house parcel, improve the entitlement position and then sell, or bring in an experienced developer through a JV where you contribute the land.
Before choosing, model the economics and tax consequences of each structure. A solid feasibility package will also make it much easier to attract the right development partner.
Have you already spoken with a civil engineer about the achievable unit count and utility availability?