An 18 acre land bank held nine years is a case study in reading a funded utility plan instead of a growth story

@dmitri_248 the clean answer is a recorded boundary line agreement signed by both owners, done early in the hold, around year three. Legal work on one of those runs a few hundred dollars. On the option question, an option of that shape does let the buyer file, and the seller keeps approval over the application package. That approval earns its keep in one situation: striking a request for a density that would kill the resale price if the buyer walks and the land has to be sold entitled but odd.

The weed abatement notices are the part people in my line of work see constantly. Two rounds in nine years on 18 acres is light. Around here the county will mow it for you and lien the parcel at a rate that would make you laugh, and the lien sits there compounding until somebody notices at closing. If you're holding raw ground more than an hour from where you sleep, find a guy with a tractor and pay him once a year before anyone sends you a letter. It's $400 to avoid a mess.

Nine years of paying taxes on something that sends back nothing is the part most people underestimate. The appeal of a rental is money arriving monthly, and raw land is the opposite of that. How was the carry actually budgeted, paid out of other deals as each bill came due, or set aside for the full nine years at the start?

@paulgrant17 a long hold like this often gets set aside as a line item for the first few years and then stops getting noticed. Planning nine years of carry cost up front can be daunting enough to talk someone out of the deal, even when the actual monthly bill starts small. That's the trick of a long land hold and also its trap: the carry is small enough to ignore and long enough to matter.

My parcels are 90 minutes further out than yours and there is no funded trunk line in any document anywhere, because there's no district to fund one. Everything is well and septic and will be forever. So your whole thesis mechanism doesn't exist in my market. What I have instead is price, $900 to $1,800 an acre, and the appreciation driver is people leaving cities for cheap acreage rather than a builder assembling lots. Different bet. Slower, and I have no idea what my equivalent of your capital improvement plan is. Possibly broadband buildout maps.

Running your numbers against a duplex I bought the same year for about the same money. Mine has paid me and it's also cost me a roof, two turnovers, a water heater, and a tenant who stopped answering the phone in month fourteen. You got $221,000 of appreciation and nine years of nothing happening. I don't know which I'd choose. I know which one I'd have been able to do while my kid was small.

What if the extension had been cancelled instead of slid two cycles? Not delayed, killed, board votes to reallocate to a different quadrant. You're sitting on 18 ag acres at $4,200 with a market that just learned the pipe isn't coming. Do you sell into that at a loss or do you hold another decade on a worse thesis? I ask because that's the branch I keep hitting in my own analysis and I never like my answer.

@jordan_ellis2 I hold, because I paid cash and $1,400 a year doesn't force me anywhere. If I'd had a note on it I'd have been selling into the worst possible bid. That's the real reason I stayed unlevered and I should have said it plainly in the post.

Can someone explain what a capital improvement plan is in plain terms? I've read this thread twice. Is it a public document a buyer can just look at, and does every county have one?

@kevin_lombard a capital improvement plan is the budget a city, county, or utility district publishes for physical infrastructure projects such as roads, water lines, and sewer extensions, typically covering several years forward. It is usually a public document, sometimes posted on the jurisdiction's website and sometimes available only within board meeting packets that have to be requested directly. The important distinction within the plan is that near-term years are typically funded with identified money, while far-out years are often aspirational and unfunded. Availability and format vary considerably by state and by the size and resources of the jurisdiction, so tracking one down for a specific area sometimes takes a direct call to the planning department.

4% on the sell side to the broker who called you once a year for five years seems like the cheapest part of this deal. I'm getting licensed and that's the business model I'd actually want, a list of raw parcels in a growth quadrant and a phone call every twelve months. Did you ever consider listing it publicly instead, or was going direct to the builder always the plan?

@ryanmck27 keeping a parcel like that off the open market is a common pattern when builders in an area are assembling. A public listing would price the land against retail acreage buyers, who typically pay less per acre than an assembler who needs that specific parcel to make a larger lot count work.