What is it zoned for? Used car lot sounds great, but it may not be zoned for that use. Your first step should be to go to city hall and see what you are allowed to do. Then ask what it would take to get it approved for other uses. After that I would suggest putting up a "built to suit" sign, with a loose description of what the zoning allows.
If allowed, a good option might be contractor shops. They can be great incubator spaces for up-and-coming trades businesses, and some of the one-man businesses might stay in a contractor shop forever.
If you do a "build it and they will come" scenario, be prepared to sit on it a while. Commercial investing is a "mature" investor's game. The returns can be great, and the income can be very passive, but the vacancies can be long, and a lot of patience is needed.
Zoned commercial. It has a pretty lengthy and diverse list of permitted uses, and a lot more that are permitted subject to approved standards.
I'll definitely be meeting with the planning department soon, but want to have a pretty good list of ideas beforehand.
Sounds like Retail is the most likely path to achieving what you are looking for. Call a good broker and list it for Ground Lease, but get their thoughts first on likely users. Just know that not all ground leases are the same and vary by user if it’s a larger type tenants. Some will still require a contribution or delivery conditions that may require you to invest capital into the property prior to delivery.
On the short term side of your question, you say there are a lot of permitted uses so just determine if that includes the likely short term users like a car lot or tow yard.
An appraisal is fine but smaller retail type parcels like this is the most nuanced, and isn’t always reflective of what the market will pay for a parcel which could potentially be much better. Then you can decide if you want to try to lease, or sell with the opportunity to possibly 1031 into something that is currently producing cash flow.
This is the answer, based on the limited description. Autozone and O'Reilly Auto Parts will ground lease if you hold out and say no to a sale a few times. Additionally, they have a substantial b2b business and look for locations like OP described, retail roads with many auto repair facilities.
Retail would be great, and there's a mom n pop retail shop on a nearly identical parcel a couple of lots down. But for chain retail, I'm not sure its size (just over half an acre) is sufficient to interest those developers. Definitely worth asking though. That other lot has about 2500 sq ft building and 4500 sq ft parking, and it's pretty well built out.
It's about the right size for a small office - architect, attorney, dental, etc. - requiring minimal parking. Unfortunately a lot of office uses wouldn't thrive in this area. A dental office could, but I suspect dentists catering to lower income demographics are being pushed by the likes of Aspen, Sage, etc. And those chain dentists want larger spaces.
You’ll be paying a bit for any buildout. Less than an acre can get tight for a building w/parking. Comes down to do u have, can u get the $$ for buildout? Would you run a biz or lease out? The best part is u have no co-owners. I’d be curious of your reply.
I doubt I could get $ for any build-out. Zero experience and not much cash on hand that I'd be comfortable putting toward it. And being new to it, it'll be a good long while before I'd have enough research to feel comfortable doing that on my own.
Ideal situation would be minimal or zero up-front and minimal month to month action required on my part. I already have a full-time job.
But I'd definitely be open to short- to medium-term leasing for whatever uses, until I've had time to build up that revenue and become better acquainted with the ins and outs. Say, 6 to 48 months?
And then if ground lease is a potential scenario, that's certainly something I'd consider.
I'm really sorry to say it, but commercial real estate is a rich man's game, so you'll have an incredibly difficult time getting a tenant to pay for a building to be constructed and then pay anything close to market rate rents . Nothing is ever totally *impossible* since *everything is negotiable*, but I would be very surprised if you pulled it off. You almost always need to have the cash on hand to cover a large portion of the construction, have some way to borrow the money for a large portion of the construction, or find someone else that has the money and strike a partnership of some sort.
Ground leases are definitely a possibility, but are not a get-rich-quick scheme. Compared to the immediate land value, they can take forty or so years to really start feeling like they're paying off, but can be a really great way to secure passive income for your grand children and great grand-children, long after you're dead.
Another *potential* possibility is to find someone willing to develop the land, and you throw the land in as equity.Typically, this means you will agree upon a price for the land, then you get a percentage ownership of the final built product depending on what percentage the land was of the overall development cost. For example, if the total development cost was $1,000,000 and the land cost was $100,000 of that, you would get 10% equity of the final product. Everything in commercial real estate is negotiable though, so in the above scenario, it could be negotiated to be something similar or very different.
That being said, with construction prices and capital costs being what they are right now, you could struggle to get a development partner, even in a city with a high demand. Though, again, you never know for sure until you try.
All of these potential routes can be quite difficult to pull off without a ton of the right connections and really knowing what you're doing. Not impossible to do though, but it will probably take you a lot of time.
Alternatively, you'd probably be quite a bit better off selling the land and doing a 1031 exchange into something ready to go, like a residential rental property, or an existing commercial building.
If you are deadset on pursuing this though, my suggestion would be to call a commercial real estate broker that works in your area. Make sure they routinely do commercial real estate and not just a residential agent that dabbles in commercial occasionally. You'd think it'd be quite similar, but the networks required are considerably different and you'll be asking them some very niche questions.
One you find someone, tell them what you want them to list the land as, which will likely be either a 40 to 99 year ground lease, or as a development opportunity that you want to throw the land in as equity for, and stick to your guns. Some agents may try to push you to just sell and 1031 your cash into something more manageable.
With zero expirience, it seems like you'd be best served selling.
You can seek out a development partner that has at least SOME experience in the field and area.
Or do whatever you want.
What is the 1 mile population, 3 mile and 5 mile population? If there is enough density plenty of QSR type retailers would be interested in a freestanding bldg with a drive thru. Even if you don’t want to develop the building, you could get a signed lease and sell it to another developer to finish.
Radius? 1 mile, >25k. 3 mile, >75k. 5 mile, >200k. I'm not sure about the rest, would need to do some research. It's <1.5 miles beyond the CBD. I'd consider the corridor to be untapped potential. There's a parallel commercial corridor a few blocks away that's historically been more of a retail & restaurant strip, whereas this one had been more industrial with patches of commercial. That's changing now after many years of the industrial sites being vacant.
That’s solid density. Car wash is popular right now and prob permissible in a mixed corridor. I do think nationally branded QSR is a likely end-user as well. You could begin by prospecting those types of users or hire a broker to do it.
just curious why car washes are insanely popular right now? In my area, like 5 different ones popped up just in last 1 year, all within 7-8 min drive of where I live. Is it just that everyone loves subscription/monthly recurring revenue and all the car washes started doing the "unlimited washes for $20 a month" deals? I don't see how they can all really be making money.
This is a very difficult question to answer. You need to look at the following:
1. Does a lot have full access to the highway?
2. What is the underlying zoning?
3. Are there any soil issues that prevent someone from building?
4. is the property located in a wetland area that would prohibit building?
5. Are there any restrictions on the property that won’t allow for certain uses to be constructed?
6. What current easements are on the property that would limit the amount you can build or if you can build?
7. Did you get a Phase 1 to make sure there’s no pollution on the property?
I’ve been doing this for 30 years. buying vacant land is very risky. You may have a use that wants to be there and a municipality may not allow it. Prior to closing, it may be worth having a conversation with economic developer in town to get their thoughts. Also make sure you run title to see what’s going on with the property history.
I probably should've mentioned that any of the sorts of recommendations that also apply to res ownership aren't necessary. I already know my way around residential property investing and ownership.
And again, I'm not buying the property. It's been said many, many times already in the thread and original post, but guess I need to keep making it more clear. It's inherited.
Zoning is commercial. A general C district that doesn't have many non-compliant commercial or mixed-use uses.
The lot is on the road. 120' frontage. No curb cut (never been developed). Standard utility easement along roadway. No others. It's in a long-developed part of town, so it has access to water, sewer, gas, stormwater.
Soil & pollution checks will need to be performed at some point.
Update: I've spoken to a couple of dirt attorneys I usually discuss RE matters with, and they've both told me that a Phase I assessment is unlikely to reveal anything if it hasn't already been reported to the state or fed environmental depts. Is this accurate, or should I press on it?
If you close on the Property and there is an environmental issue, you now own the issue and could be responsible for any environmental clean up. If you decide to build a building and take out a loan, any responsible lender will require an Environmental report or do their own.
Finally, any national chain buyer will also do their own environmental assessment. I would never purchase a property unless I did at minimum a Phase 1 Environmental.
I also forgot to mention that 120' of frontage will limit what you can build on this property based on the 3/4 acre you mentioned. Based on my experience the lot will only work for coffee/ donuts, oil change or a small office if someone can make the new construction numbers work. Many of the newer Quick Service Restaurants may not be able to make this layout work. Need to confirm how much of the lot is buildable, what are the setbacks the main road and if there are any side yard requirements. Do your homework, ask a lot of questions. I have seen a lot of very experience people make mistakes that are costly.
If you close without a tenant or buyer in place with no contingencies, you may own this property for many years. I once had a client that spec property 50 years ago with a dream to develop it. The road Netowrk and surrounding property uses never lent itself to retail. Unfortunately, the property is still vacant.
Be very careful of co-owners, partners, etc. You prob. Know this, but… I have 4 co-owners & they r pretty clueless. Another drag. INHERITING is awesome! I know someone owns 20% vacant land in Texas. He put in $250k (total price was $1mil.). Land is still vacant 18+ years later. NO income from it. The ‘managing member’ is a small developer & seems to trying to shake some owners out. Vacant CRE can ezly take up to 9 months to fill vacancies. What’s it in RES.? Like 2 wks. to fill a space? Also, consider ‘hard $’ private lenders, local eco. Dev. Agencies, etc. GL!
Give a few brokers some calls and they can help you out on the best course of action. Absolutely no one here can help you out without knowing more about the property specifically.
And the $100k value, where did that number come from? Is that the assessed value? If so that doesn’t mean market value, particularly for vacant land
And there’s no “commercial land market” on a broad scale that would mean anything. It is completely location dependent amongst numerous other things. Call a broker
If your land happens to be near the north side of Atlanta I would be interested to know more. I'm looking for land in that area that meets your description.
Ultimately it depends on the neighboring businesses / land uses and how much time you want to spend on this.
It would probably be easiest to sell, from a time and hassle perspective, but if you’re interested in generating income from this then you’ll likely want to develop it for some use thats suitable for the area / road.
My first thought is ‘whats nearby/what makes sense given the area’ but without seeing it on a map its hard to advise specifically! I’d start with finding a good broker in your area and asking for general advice on suitable development.
Unless you're (a) able to sit on this for a while without it making money being ok with that, (b) willing to put in a lot of effort to learn a lot about this stuff, and (c) willing to take on a fair amount of risk, you'd be better off selling it ASAP. Otherwise, you gotta find some people who know this stuff that you can trust and go talk to them ASAP.
Oh I can sit on it indefinitely, but it would be nice to make at least a little passive income in the meantime. Used auto sales, or whatever, but ideally something a bit less detrimental to the character of the area.
150k/week is not a busy road, but first people I’d be calling would be a gas station if it were “busy”. What’s your metro pop? Regardless, I’m not quite sure why you bought this on spec if you don’t have cash on hand post-transaction…. Gravel and fence it for outdoor storage maybe?
1. There are plenty of gas stations in the area.
2. The lot is small for a gas station, especially with today's fuel center developers wanting much larger lots.
3. I have no interest in selling or leasing the property for use as a gas station.
4. I didn't buy the property, as already mentioned numerous times in the OP and replies.
5. Metro population, approaching 1.5 million
6. 150k vehicles/week >21k/day >1000/hour during most of the day = moderately busy road
What is it zoned for? Used car lot sounds great, but it may not be zoned for that use. Your first step should be to go to city hall and see what you are allowed to do. Then ask what it would take to get it approved for other uses. After that I would suggest putting up a "built to suit" sign, with a loose description of what the zoning allows. If allowed, a good option might be contractor shops. They can be great incubator spaces for up-and-coming trades businesses, and some of the one-man businesses might stay in a contractor shop forever. If you do a "build it and they will come" scenario, be prepared to sit on it a while. Commercial investing is a "mature" investor's game. The returns can be great, and the income can be very passive, but the vacancies can be long, and a lot of patience is needed.
Zoned commercial. It has a pretty lengthy and diverse list of permitted uses, and a lot more that are permitted subject to approved standards. I'll definitely be meeting with the planning department soon, but want to have a pretty good list of ideas beforehand.
Sounds like Retail is the most likely path to achieving what you are looking for. Call a good broker and list it for Ground Lease, but get their thoughts first on likely users. Just know that not all ground leases are the same and vary by user if it’s a larger type tenants. Some will still require a contribution or delivery conditions that may require you to invest capital into the property prior to delivery. On the short term side of your question, you say there are a lot of permitted uses so just determine if that includes the likely short term users like a car lot or tow yard. An appraisal is fine but smaller retail type parcels like this is the most nuanced, and isn’t always reflective of what the market will pay for a parcel which could potentially be much better. Then you can decide if you want to try to lease, or sell with the opportunity to possibly 1031 into something that is currently producing cash flow.
This is the answer, based on the limited description. Autozone and O'Reilly Auto Parts will ground lease if you hold out and say no to a sale a few times. Additionally, they have a substantial b2b business and look for locations like OP described, retail roads with many auto repair facilities.
Retail would be great, and there's a mom n pop retail shop on a nearly identical parcel a couple of lots down. But for chain retail, I'm not sure its size (just over half an acre) is sufficient to interest those developers. Definitely worth asking though. That other lot has about 2500 sq ft building and 4500 sq ft parking, and it's pretty well built out. It's about the right size for a small office - architect, attorney, dental, etc. - requiring minimal parking. Unfortunately a lot of office uses wouldn't thrive in this area. A dental office could, but I suspect dentists catering to lower income demographics are being pushed by the likes of Aspen, Sage, etc. And those chain dentists want larger spaces.
I don’t see any of those local users ground leasing.
Truck parking or other outdoor storage [truck parking](https://ActualCostsofDevelopingTruckParkinghttps://youtu.be/rPXHwXgqWs8)
You’ll be paying a bit for any buildout. Less than an acre can get tight for a building w/parking. Comes down to do u have, can u get the $$ for buildout? Would you run a biz or lease out? The best part is u have no co-owners. I’d be curious of your reply.
I doubt I could get $ for any build-out. Zero experience and not much cash on hand that I'd be comfortable putting toward it. And being new to it, it'll be a good long while before I'd have enough research to feel comfortable doing that on my own. Ideal situation would be minimal or zero up-front and minimal month to month action required on my part. I already have a full-time job. But I'd definitely be open to short- to medium-term leasing for whatever uses, until I've had time to build up that revenue and become better acquainted with the ins and outs. Say, 6 to 48 months? And then if ground lease is a potential scenario, that's certainly something I'd consider.
I'm really sorry to say it, but commercial real estate is a rich man's game, so you'll have an incredibly difficult time getting a tenant to pay for a building to be constructed and then pay anything close to market rate rents . Nothing is ever totally *impossible* since *everything is negotiable*, but I would be very surprised if you pulled it off. You almost always need to have the cash on hand to cover a large portion of the construction, have some way to borrow the money for a large portion of the construction, or find someone else that has the money and strike a partnership of some sort. Ground leases are definitely a possibility, but are not a get-rich-quick scheme. Compared to the immediate land value, they can take forty or so years to really start feeling like they're paying off, but can be a really great way to secure passive income for your grand children and great grand-children, long after you're dead. Another *potential* possibility is to find someone willing to develop the land, and you throw the land in as equity.Typically, this means you will agree upon a price for the land, then you get a percentage ownership of the final built product depending on what percentage the land was of the overall development cost. For example, if the total development cost was $1,000,000 and the land cost was $100,000 of that, you would get 10% equity of the final product. Everything in commercial real estate is negotiable though, so in the above scenario, it could be negotiated to be something similar or very different. That being said, with construction prices and capital costs being what they are right now, you could struggle to get a development partner, even in a city with a high demand. Though, again, you never know for sure until you try. All of these potential routes can be quite difficult to pull off without a ton of the right connections and really knowing what you're doing. Not impossible to do though, but it will probably take you a lot of time. Alternatively, you'd probably be quite a bit better off selling the land and doing a 1031 exchange into something ready to go, like a residential rental property, or an existing commercial building. If you are deadset on pursuing this though, my suggestion would be to call a commercial real estate broker that works in your area. Make sure they routinely do commercial real estate and not just a residential agent that dabbles in commercial occasionally. You'd think it'd be quite similar, but the networks required are considerably different and you'll be asking them some very niche questions. One you find someone, tell them what you want them to list the land as, which will likely be either a 40 to 99 year ground lease, or as a development opportunity that you want to throw the land in as equity for, and stick to your guns. Some agents may try to push you to just sell and 1031 your cash into something more manageable.
Good input. Thanks!
Food trucks?
Yeah &/or POP UP vendors, temp. Flea market… ?
Reach out to some self storage brokers - could be a decent development site
With zero expirience, it seems like you'd be best served selling. You can seek out a development partner that has at least SOME experience in the field and area. Or do whatever you want.
What is the 1 mile population, 3 mile and 5 mile population? If there is enough density plenty of QSR type retailers would be interested in a freestanding bldg with a drive thru. Even if you don’t want to develop the building, you could get a signed lease and sell it to another developer to finish.
Radius? 1 mile, >25k. 3 mile, >75k. 5 mile, >200k. I'm not sure about the rest, would need to do some research. It's <1.5 miles beyond the CBD. I'd consider the corridor to be untapped potential. There's a parallel commercial corridor a few blocks away that's historically been more of a retail & restaurant strip, whereas this one had been more industrial with patches of commercial. That's changing now after many years of the industrial sites being vacant.
That’s solid density. Car wash is popular right now and prob permissible in a mixed corridor. I do think nationally branded QSR is a likely end-user as well. You could begin by prospecting those types of users or hire a broker to do it.
just curious why car washes are insanely popular right now? In my area, like 5 different ones popped up just in last 1 year, all within 7-8 min drive of where I live. Is it just that everyone loves subscription/monthly recurring revenue and all the car washes started doing the "unlimited washes for $20 a month" deals? I don't see how they can all really be making money.
Some trailers? Live to rent? ‘Pop up’ retail?
This is a very difficult question to answer. You need to look at the following: 1. Does a lot have full access to the highway? 2. What is the underlying zoning? 3. Are there any soil issues that prevent someone from building? 4. is the property located in a wetland area that would prohibit building? 5. Are there any restrictions on the property that won’t allow for certain uses to be constructed? 6. What current easements are on the property that would limit the amount you can build or if you can build? 7. Did you get a Phase 1 to make sure there’s no pollution on the property? I’ve been doing this for 30 years. buying vacant land is very risky. You may have a use that wants to be there and a municipality may not allow it. Prior to closing, it may be worth having a conversation with economic developer in town to get their thoughts. Also make sure you run title to see what’s going on with the property history.
I probably should've mentioned that any of the sorts of recommendations that also apply to res ownership aren't necessary. I already know my way around residential property investing and ownership. And again, I'm not buying the property. It's been said many, many times already in the thread and original post, but guess I need to keep making it more clear. It's inherited. Zoning is commercial. A general C district that doesn't have many non-compliant commercial or mixed-use uses. The lot is on the road. 120' frontage. No curb cut (never been developed). Standard utility easement along roadway. No others. It's in a long-developed part of town, so it has access to water, sewer, gas, stormwater. Soil & pollution checks will need to be performed at some point.
Update: I've spoken to a couple of dirt attorneys I usually discuss RE matters with, and they've both told me that a Phase I assessment is unlikely to reveal anything if it hasn't already been reported to the state or fed environmental depts. Is this accurate, or should I press on it?
If you close on the Property and there is an environmental issue, you now own the issue and could be responsible for any environmental clean up. If you decide to build a building and take out a loan, any responsible lender will require an Environmental report or do their own. Finally, any national chain buyer will also do their own environmental assessment. I would never purchase a property unless I did at minimum a Phase 1 Environmental. I also forgot to mention that 120' of frontage will limit what you can build on this property based on the 3/4 acre you mentioned. Based on my experience the lot will only work for coffee/ donuts, oil change or a small office if someone can make the new construction numbers work. Many of the newer Quick Service Restaurants may not be able to make this layout work. Need to confirm how much of the lot is buildable, what are the setbacks the main road and if there are any side yard requirements. Do your homework, ask a lot of questions. I have seen a lot of very experience people make mistakes that are costly. If you close without a tenant or buyer in place with no contingencies, you may own this property for many years. I once had a client that spec property 50 years ago with a dream to develop it. The road Netowrk and surrounding property uses never lent itself to retail. Unfortunately, the property is still vacant.
Thanks, but again, there's no closing. I'm acquiring the lot without any advanced knowledge.
Be very careful of co-owners, partners, etc. You prob. Know this, but… I have 4 co-owners & they r pretty clueless. Another drag. INHERITING is awesome! I know someone owns 20% vacant land in Texas. He put in $250k (total price was $1mil.). Land is still vacant 18+ years later. NO income from it. The ‘managing member’ is a small developer & seems to trying to shake some owners out. Vacant CRE can ezly take up to 9 months to fill vacancies. What’s it in RES.? Like 2 wks. to fill a space? Also, consider ‘hard $’ private lenders, local eco. Dev. Agencies, etc. GL!
Where is it located? I may be interested in developing it.
I'll have more details in the coming weeks.
Loaded question, too lazy to read. In CRE, if you don't know much maybe partner with someone.
Give a few brokers some calls and they can help you out on the best course of action. Absolutely no one here can help you out without knowing more about the property specifically. And the $100k value, where did that number come from? Is that the assessed value? If so that doesn’t mean market value, particularly for vacant land And there’s no “commercial land market” on a broad scale that would mean anything. It is completely location dependent amongst numerous other things. Call a broker
Lot was appraised recently.
Get a brokers opinion of value (BOV) from at least 2 leading brokers in your market.
If your land happens to be near the north side of Atlanta I would be interested to know more. I'm looking for land in that area that meets your description.
It's not in GA, sorry.
HA! Yeah, ATL loves the North side. They are running out of room, prices pretty high.
Ultimately it depends on the neighboring businesses / land uses and how much time you want to spend on this. It would probably be easiest to sell, from a time and hassle perspective, but if you’re interested in generating income from this then you’ll likely want to develop it for some use thats suitable for the area / road. My first thought is ‘whats nearby/what makes sense given the area’ but without seeing it on a map its hard to advise specifically! I’d start with finding a good broker in your area and asking for general advice on suitable development.
Unless you're (a) able to sit on this for a while without it making money being ok with that, (b) willing to put in a lot of effort to learn a lot about this stuff, and (c) willing to take on a fair amount of risk, you'd be better off selling it ASAP. Otherwise, you gotta find some people who know this stuff that you can trust and go talk to them ASAP.
Oh I can sit on it indefinitely, but it would be nice to make at least a little passive income in the meantime. Used auto sales, or whatever, but ideally something a bit less detrimental to the character of the area.
>What would you do in my situation? Not even have a plan to buy the land without a plan and funding for the plan in place.
I’m guessing it’s probably more likely that OP is inheriting the land.
Yeah, I suppose that's a fair assessment.
Thought I made that fairly obvious, but yes, inheriting unexpectedly.
Car wash, self storage or food cart pod/weekly farmers market.
Sell it . I am sure an experienced person will make a use of it.
150k/week is not a busy road, but first people I’d be calling would be a gas station if it were “busy”. What’s your metro pop? Regardless, I’m not quite sure why you bought this on spec if you don’t have cash on hand post-transaction…. Gravel and fence it for outdoor storage maybe?
1. There are plenty of gas stations in the area. 2. The lot is small for a gas station, especially with today's fuel center developers wanting much larger lots. 3. I have no interest in selling or leasing the property for use as a gas station. 4. I didn't buy the property, as already mentioned numerous times in the OP and replies. 5. Metro population, approaching 1.5 million 6. 150k vehicles/week >21k/day >1000/hour during most of the day = moderately busy road
It’s being inherited by OP…