Gravel and fence at $210k turned six acres into a trailer parking ground lease
Land plays into industrial income without a building on it, so here's how one went.
I bought 6.1 acres of I-2 zoned ground in a secondary market about 4 miles from an interstate interchange, in a corridor where every warehouse built in the last decade has more dock doors than trailer stalls. Paid $540,000, roughly $88,000 an acre, in 2023. The site was raw, partly wooded, with a ditch running the northeast corner.
The use I wanted was industrial outdoor storage, meaning trailer and container parking, which in this jurisdiction was permitted by right in I-2 as long as I met the screening and surfacing standards. I want to be careful here: whether outdoor storage is permitted, and what surface counts, is entirely local, and the definitions differ from one zoning code to the next even inside the same county. I paid a land use attorney for a written opinion before I closed and I'd do that again every time.
Work: clearing and grubbing $46,000, engineered stormwater basin $71,000 (the ditch was the expensive part), 9 inches of compacted crushed base over the usable 5.2 acres $63,000, 8 foot fence with two gates $22,000, lighting and a gravel apron $8,000. Call it $210,000. Permitting and engineering ran another $31,000 and took seven months, which was three months longer than I'd been told.
The lease: a regional trucking operator took the whole yard on a 7 year absolute net ground lease at $9,500 a month, 3 percent annual bumps, they maintain the surface and carry insurance. That's $114,000 a year against $781,000 all in, so about 14.6 percent on cost. No roof. No HVAC. No tenant improvements ever.
The part that nearly broke it: the stormwater review. My first submittal assumed the existing ditch could stay as conveyance. The reviewer disagreed, and the redesign is where the $71,000 and three of the seven months went. If the basin had needed to be bigger, I'd have lost usable acreage and the rent with it.
What I'd keep: paying for the civil engineer's opinion on drainage before I removed the inspection contingency, which I did not do this time and got lucky on.