Valuing 0.6 acres of excess land behind a 14-unit under LOI

Parcel, the parking ratio is the whole question and you can get most of the way there without a civil engineer. Count the existing striped spaces on the front lot, count the gravel spaces you'd lose, and read the ordinance's required ratio for the existing 14 units. If losing the gravel puts you below the required count for the existing buildings, the pad is worth zero until you either buy a variance or build structured parking, and neither of those is a due diligence exercise. That's a tape measure and an afternoon with the code, not 9k.

One thing to check in the same pass: whether your district counts gravel as legal parking at all. Plenty of ordinances require paved and striped, which means the seller may already be non-conforming and you'd inherit that.

Subdivision and variance procedure vary by state and by municipality, so confirm the actual process with the planning department in writing rather than off the counter conversation.

The free option framing deserves some pushback. If you close without confirming anything, you own a 6.7 cap asset and a gravel lot, which is exactly what you would own if you had confirmed and the answer was no. The 6 to 9k only buys you the ability to pay more with confidence. So the question is whether you are actually planning to pay more, and it sounds like you are not, because the seller thinks he is selling 14 units. The month of exposure is the real cost. What stops him from shopping you is a non-refundable deposit, and whether that is worth it depends on how thin your competition actually is. How many other buyers were at the tour?

Buy the 14 units on the 14 units. Put the survey money in the roof reserve and look at the dirt in year three.

Verity's version is what I'd do, with one change. Get the survey now anyway, because you need one for title and financing regardless, and a boundary survey with topo added costs a fraction of ordering it twice. Skip the civil sketch and the capacity letters until you own it.

The reason I'd sequence it that way: the pad site option has no expiration you control. Zoning can change on you, sure, but sewer capacity and setbacks aren't going to improve if you spend a month studying them now. Meanwhile you're buying at a point in the cycle where the apartment supply pipeline is thinning and the operational value-add on 14 units at 895 against 1,050 comps is the return you're actually being paid for. That's 14 unit turns over three or four years and it doesn't need a planner's blessing.

Where I'd spend the month instead is on the boiler, the sewer lateral scope for the existing buildings, and two years of utility bills. Arbor's point about the gravel being non-conforming already is the one that would make me nervous, because that isn't upside you're passing on, that's a liability you'd be assuming.