All Forum Posts by: Alicia Prokos

I didn't think a rule of thumb for Tennessee was proprietary level information. This isn't my first project, but yes, I am going into a new market and am having some frustration getting quotes for benchmarks. I have done my due diligence on the Knoxville market and what I can expect on the topline, but thanks for that warning. I feel the demand from out-of-state retirees looks strong and will continue to be so. The county I'm looking in seems very much open for business, but yes, I have heard about the resistance.

Investment Info:

Other other investment in Cynthiana.

Purchase price: $1,300,000
Cash invested: $700,000
Sale price: $3,300,000

Large lot (5-20 acres) subdivision outside of Cynthiana, KY, within 15 minute drive to Georgetown Toyota Assembly Plant. Purchased three gently rolling parcels and combined them to create a creekside community of 33 lots. This rural subdivision with HOA was aimed at residential end buyers wanting to build their own homes or mini-farms with loose restrictions. Thirty-three (33) tracts went on market in June '22, sold out within 6 months, despite rising interest rate environment in 2nd half 2022.

What made you interested in investing in this type of deal?

The demand I saw for single families wanting a home in the country with a rural lifestyle, yet close to employment and amenities. I also saw a desire for HOA protection from extremes like junky cars up on blocks in the front yard, but much looser restrictions overall so that people could do what they wanted without a lot of interference, such as chicken coops, 4H projects, vegetable gardens, barndominiums, etc.

How did you find this deal and how did you negotiate it?

I found it through my land real estate agents at Traylor Real Estate & Development and Keller Williams Greater Lexington.

How did you finance this deal?

We self-financed this deal.

How did you add value to the deal?

We demo'd tear-down barns and a burnt-out 18th century home. We cleared out scrub and unsightly nuisance vegetation, bushhogging entire property. We built a gravel road network and installed water main extension and hydrants and above ground electricity. Tested for septic and set up "fill and waits" for non-perked property. Renovated grain silo at entrance and added recreational pavilion complete with outdoor furniture, stocked fishing lake, fire pit, and landscaped and lighted entrance.

What was the outcome?

The development met our financial goals and was successful. The local Harrison County planning & zoning department was very pleased with the outcome because we were able to address a need for 5-10 acre lots for residential building in the community.

Lessons learned? Challenges?

Obtaining variances for "flag" attachments to surrounding public roads was a challenge. We found existing subdivision and zoning regulations had lost track of their reasons for being but were still zealously defended by old timers who offered strong resistance. We brought in several new amenities to the community in exchange for the variances. We violated a few stormwater regulations accidentally but corrected our errors.

Investment Info:

Other other investment in Cynthiana.

Purchase price: $1,300,000
Cash invested: $700,000
Sale price: $3,300,000

Large lot subdivision outside of Cynthiana, KY, within 15 minute drive to Georgetown Toyota Assembly Plant. Purchased three gently rolling parcels and combined them to create a creekside community of 33 lots. Demo'd tear-down structures, installed roads, utilities, pavilion, fishing pond and other amenities with HOA for residential end buyers wanting to build their own homes or mini-farms with loose restrictions. Thirty-three (33) tracts went on market in June, 2022. Every single tract was sold out within 6 months, despite rising interest rate environment in 2nd half 2022.

What made you interested in investing in this type of deal?

The demand I saw for growing families wanting a home in the country with a rural lifestyle, yet close to employment and amenities. I also saw a desire for HOA protection from junky cars up on blocks in the front yard, but much looser restrictions so that people could do what they wanted without a lot of interference, such as chicken coops, 4H projects, vegetable gardens, barndominiums, etc.

How did you find this deal and how did you negotiate it?

I found it through my land real estate agents.

How did you finance this deal?

We self-financed this deal.

How did you add value to the deal?

We demo'd tear-down barns and a burnt-out 18th century home. We cleared out scrub and unsightly nuisance vegetation, bushhogging entire 340 acres. We built a gravel road network and installed water main extension and hydrants and above ground electricity. Tested for septic and set up "fill and waits" for non-perked property. Renovated grain silo at entrance and added recreational pavilion complete with outdoor furniture, stocked fishing lake, fire pit, and landscaped and lighted entrance.

What was the outcome?

The development met our financial goals and was successful. The local Harrison County planning & zoning department was very pleased with the outcome because we were able to address a need for 5-10 acre lots for residential building in the community.

Lessons learned? Challenges?

Obtaining variances for "flag" attachments to surrounding public roads was a challenge. We found existing subdivision and zoning regulations had lost track of their reasons for being but were still zealously defended by old timers who offered strong resistance. We brought in several new amenities to the community in exchange for the variances. We violated a few stormwater regulations accidentally but corrected our errors.

Thank you, but I have financing and a detailed pro forma profitability model. There is a housing shortage in the submarket I'm looking at so I'm OK there too. I'm not asking anyone to do any work without paying them. I'm simply looking for rules of thumb or best and worst general parameters for the most basic cost components at the rough feasibility stage, as in " a water line will cost you at least X per foot, but I've seen it as much as Y." If I at least can have a high- low or worst and best case, I can then determine if a site has enough meat on the bone on it to move forward with the more costly due diligence steps. I don't see very many rules of thumb out there, so I'm asking if others have any off the top of their heads which are useful to them. I do have experience from 3-4 developments I've done in Kentucky, but I'm not sure if those costs are typical, especially with COVID swinging the supply chain prices up and down over the past few years. I'm just wanting to hear other people's rough estimates. Thanks for your reply, though.

I'm not sure I understand. Are you saying you had plans to clean up the land and put a short term rental on it, but never went forward with the plans, either because due to regulation or lack of money you couldn't? Then you tried to sell one of the lots so you would have the money to execute plans on the other, but it didn't sell?

Now you are asking whether to keep trying to sell both lots in order to find another property, is that right?

I would say before you do anything, evaluate your development or exit options thoroughly with the property you have, taking into consideration county planning & zoning rules, your budget, resources, your own skill set,timeframe, what you can do under powerlines, etc. Then pick the best option. If the best option is to just cut price and sell, and then you end up buying a new property, make sure you do all this research upfront before actually purchasing anything else, in order to make sure you can execute upon your chosen strategy and avoid having to sit on property again. Hope that helps.

Yes, I would agree, a best case-worst case is what I'm after. Thanks for helping me to clarify my thinking. 

I am considering buying a 50 acre, rolling to hilly parcel with lake views near Knoxville, TN for a proposed subdivision of 1 acre lots.  I need a good short hand method to estimate the cost of building a curb and gutter road along with trenching and installation of gas, water, sewer, and electric. Everyone I consult says it depends and that I must hire an engineer and do soil testing, etc. in order to get an accurate number.  Also people seem not to want to give me rough estimates because I might "hold them to it," or because there are "a million factors." I know all that, but I look at a lot of land and I need a back of the envelope evaluation method that gives me a sense of rough feasibility to know if this is worth my time financially.  I realize there are unexpected things that come up and a dizzying amount of variables that affect the cost, but I need to start somewhere and don't want to pay for engineering and other studies for every property that I review. I also realize that prices vary a lot state to state and county to county, given the local standards for building. All that aside, does anyone have a generic range for these components, for example say $x/ linear foot for a 20-ft wide, standard roadway with extruded curb & gutter, say doubling that if your grades are more than Y degrees, or tripling if more than Z degrees? Or 10X the whole thing if you have to blast through rock? Also, $X per linear ft for a 6" water line, including trenching, pipe, and installation labor? And the same rough linear foot benchmark for gas, underground electric, and sewer trunk extensions (not lateral lines to individual homes, but extensions of the utility main lines into the new community). Any references to cost estimation algorithms or instructional education would be most helpful too. Thank you!

Our company, Big Pine Land is looking to expand to the great state of Tennessee and is seeking investor-friendly realtors in Eastern Tennessee - more specifically the areas surrounding  Johnson City, Kingsport, Knoxville, Cleveland, &  Chattanooga. We specialize in developing rural land for residential building and subdivisions, so we are looking to form a relationship with realtors who have knowledge of county regulations, possess relationships with planning & zoning, and have connections with contractors and/or engineers. 

We have checked the BiggerPockets realtor finder. However, we wanted to reach out in the forums as well for personal recommendations for investor-friendly realtors specializing in rural land that you would be kind enough to share

Our most recent project, Mill Creek Meadows, a $4 million development comprised of 340 acres just outside of Cynthiana, KY, sold out in just 6 months. It features 5-15 acre rolling lots for single-family residential building, all less than 20 minutes to the Toyota Georgetown manufacturing plant and 30 minutes to Lexington. We are looking to find similar, large tracts of land suitable for development with proximity to metro areas and growing industries. 

It's already been said, but I would look for seller financing. I know that doesn't help you with your current situation, but wholesaling the deal is a start. If you establish a rapport with the seller, and he or she is not in immediate need of the money, you may be surprised the generous terms you can get. Like 0% interest!

@Vik Gupta

Starting in a high cash flow market makes sense. But just a caveat- sometimes investments that you think will cash flow don't always turn out that way, especially in the beginning.  Even with great due diligence, things always seem to "pop up" in the early years. After 2-3 years, usually anything wrong with the property has exposed itself, and once you have made the necessary repairs for the long term, the property stabilizes and produces reliable cash flow. It's up to you, but this kind of thing is much easier to handle close to home. If you choose to invest out of state, I would make sure you have a reliable team that can help you through this "honeymoon" period with your new property.