Got a fun one for you. - Posted by Aaron

Posted by GL(ON) on March 04, 2002 at 15:42:42:

I don’t think you can do anything with this particular property but you do bring up an interesting point.

What if you could buy land cheap, acres of it, in the path of urban development and hold it until it becomes part of the city and the value skyrockets?

How about mini storage units? They can be built at low cost on a slab, with minimal plumbing and wiring. But you can get as much rent per square foot as a luxury apartment.

So you buy the land, put up the mini storage buildings, and then rent them out for the next 10 or 20 years. You can make a good living, and pay all your expenses, off the rents alone.

Eventually if someone is willing to pay $500,000 an acre for land you paid $30,000 an acre for, why not? They can bulldoze the storage units and put up a skyscraper if they want.

Here is another one, not quite as good: Mobile home park. There was actually a message on this board a few months back about a mobile home park going cheap in some city in Texas. It was kind of run down but had been there for years, and was now completely surrounded by urban development including a university down the street. I don’t know why it never got bought up for development but it will someday. I never saw a mobile home park in the middle of a city before.

Got a fun one for you. - Posted by Aaron

Posted by Aaron on March 04, 2002 at 10:53:20:

warning…potential newb question below

There’s an interesting property in south Austin (15 min from downtown), TX that consists of 10 acres of land, and a 5 bedroom, 500sqft house. The seller is asking $349K. The house has been on the market for 4 (listed twice).

The first time it was listed, they were asking for $329K.

My wife and I took a tour of the land and house and discovered while the land was absolutly beautiful and well maintained, the ranch style house hadn’t been maintained in many, many years, and as such, requires:

  • Every room to be renovated in some way
  • Needs a new septic system
  • Mold damage in 3 areas, one of which is a bathroom
  • Needs new roof
  • 2 of the 3 AC units are dead
  • House smells musty
  • Single pane windows

To me, the house really seems unrepairable. My best guess, without spending a ton more on due diligence is that it would take $75K to $100K to make the repairs and make it inhapbitable.

I figure the seller is discounting the house a lot (350K / 10 acres = 35K/acre) and is trying to sell based mainly on the land. The seller is not a motivated seller since he’s the nephew of the real owner (who is in a nursing home).

The next time Austin decides to grow, I think this area will really take off in valuations.

Knowing this, how could an investor profit from this property when he only has ~40K in liquid assets?