Who actually buys the parcel in year 12?

Who even lists ground like this? Every broker sign I see out that far is the same two names, and I assumed that was coincidence.

The residual number that kills deals in my experience of watching horizontal budgets is dirt work. If there's rock at three feet, or the fall on that 60 acres means the developer is importing fill for roads, the cost side of their math swells and the land line shrinks to absorb it. Same behavior as scope creep on a rehab, just at a scale where the overrun is measured in hundreds of thousands. If you can get a soils map and a rough contour off the county GIS before you buy, you're pricing what they'll price.

Before you get to year 12, pull a title commitment and read Schedule B rather than skimming it. County road frontage on one side doesn't automatically mean legal access at the point a developer needs a road entrance, and I've seen commitments where the only access of record is a 20 foot easement described by a fence line that no longer exists. Also check for a mineral reservation. A severed mineral estate with surface rights attached is the kind of thing that shows up in the developer's own title work and turns into a price cut at exactly the moment you have no leverage.

Worth knowing how that buyer pays you. Developers frequently want an option or a rolling takedown rather than a cash close, so the offer you get in year 12 might be $50k down for a 24 month option while they entitle, with the balance at closing. That's not a bad outcome, it's just a different instrument than the one you're modeling. And on the financing side, raw land with no income doesn't get treated like a rental, so plan on a large down payment and short amortization if you borrow at all. Terms move, so get whatever a lender tells you in writing.

What's a residual? I've read the reply twice and I think it means the land price is whatever is left after everything else, but I want to be sure I'm not inventing that.

Yes, rigging, that's it. Land is the last line they fill in.

My question for thatch is different. Once your name is on a vacant 60 acres, do you get buried in mail from people wanting to buy it? I hear that's constant.

Is there a size that's actively awkward? 60 acres sounds fine, but if a local developer wants 20 to 40 and an ag buyer wants 150 plus, I wonder whether some parcels sit in a gap where neither pool bids.

Running thatch's carry so I understand the shape of it. $1,900 a year for 12 years is $22,800, assuming the classification holds and the assessor never revalues, which it will. On $252k that's roughly 9% of purchase price spent just to keep the parcel. Add whatever the $252k would have earned somewhere else and the appreciation you need to break even is a lot larger than the tax bill suggests. The tax line is the small part of the cost and the easy part to see.

I'll be the dissenting voice. Every unit I own tells me something every month, sometimes something expensive, but it tells me. Raw ground tells you nothing for a decade and then delivers the entire verdict at once. That's not an argument against it, some people are built for it, but thatch you should be honest about whether you can hold through year 7 when nothing has happened and you're still writing checks to the county.

Isn't the simplest exit just the neighbor with the cattle, at a lower number? Slower money, fewer moving parts.

If a developer does approach you, the document to understand ahead of time is the option agreement, because that's what they'll hand you. What matters in it is the option fee and whether it's applied to purchase price, how many extensions they can take and at what cost, and what happens to entitlement work product if they walk. Also whether they record a memorandum of option, which ties up your title for the term and is standard practice in many states but not handled identically everywhere. Recording rules vary state to state, so have a real estate attorney in that state read it before you sign. What you don't want is a free three year lock on your parcel while their capital decides whether it feels like showing up.

The developer framing only applies in a fairly narrow band. In the rural markets I watch, the exit buyer is a person who wants 5 or 10 acres to put a manufactured home on, and there are dozens of them a year at $6k to $12k an acre. That buyer pool is deep and slow. It also means divisibility is the whole ballgame, since selling 60 acres to one household is a much thinner market than selling six 10 acre pieces. Ask the county what a minor split costs and how many you get before it becomes a subdivision plat.

Reading the whole thread back, the part I can't get past is that every version of the exit depends on growth arriving in a particular direction. What happens if the sewer extension goes north instead, and the developer's residual works on somebody else's 60 acres two townships over? Thatch still owns land, and it still has some value, but the plan is gone and there's nothing to do about it except wait longer. I don't know how anyone sizes that risk. I thought I'd finish this thread clearer and I'm less clear than when I started...