The carry cost on a land bank parcel compounds the same way the appreciation does, and most models only run one of them.

The math here is right, and it's the right thing to be running.

One thing worth adding to the ledger: assessed value on rural parcels doesn't always stay flat through the hold. In many counties, land that sits near a growing edge gets reassessed upward as neighboring parcels sell at higher prices and set new comparable values. That can push the annual tax bill meaningfully higher in years 7 through 12, exactly the window your model already flags as the worst time to be forced out. The carry isn't just compounding, it's sometimes accelerating.

A simple way to stress-test this: build three columns in your carry model, a flat-assessment scenario, one where assessed value rises 3 percent annually from year 6 onward, and one where it rises 5 percent. Then solve backward from your target annualized return (you used 6 percent, which is a reasonable benchmark for an illiquid, income-free asset) to find the minimum exit price each scenario requires. The number in the third column is usually the one that reframes whether the parcel is worth holding.

On the financing case you laid out: a 7 percent interest-only seller-carry note on a land bank parcel is genuinely aggressive carry for a no-income asset. I'd want to see the exit price needed to clear 6 percent annualized on total dollars out before putting that structure on anything.

One thing worth confirming with a local tax professional or county assessor's office: how frequently your specific county reassesses vacant land, and whether a rezoning application or a neighboring sale triggers an off-cycle reassessment. That answer changes the carry model more than most variables.

What does your flat-assessment carry total come to on what you're currently holding, and have you run the reassessment stress test yet?

The misconception worth correcting is that a doubled nominal price is the same as a doubled return, which is how a lot of land holders read their own exit. The framing above is solid, but the piece I would add is that assessed value reassessment timing is not random in most states. Many county assessors are constrained by statute to reassess on a fixed cycle, often three to five years, so you can actually map the likely tax step-ups onto your carry ledger rather than treating them as a vague back-half threat. That changes the cash flow model from a flat $1,400 line to a staircase, and the staircase usually gets steeper in years eight through twelve precisely when a forced sale would be the worst outcome. The other cost that disappears from most models is the opportunity cost on the closing costs and soft costs sunk in year one, which compounds at whatever your alternative return would have been, and on a 12 year hold that number is not trivial. What is the county's reassessment cycle on the parcel you are holding, and have you pulled the assessed value history to see how aggressively the county has moved on comparable ground when development pressure arrived?