How to market analyze bare land?

I’ve come across some REO bulk plots of land that are about $25,000 each. In my area, land similar to this sells for at least twice that much per plot. I figure that I could have them free and clear within 5-8 years. They’re being advertised as building 3 twin homes on the lots. So how do I go about making a solid analysis of plots of land? Obviously, the house isn’t built yet, so I can’t discount for paint, carpet, roof, landscaping, etc. When I think of land, I think of holding time of 10-20 years. I, myself, would probably never build on the land, but just advertise till someone came along that wanted to. I suppose I could evaluate based on local community, crime rates, etc. These plots of land I’ve found are in a very newly built area less than 5 years old. Not much crime there. However, my entire county is overbuilt; lots of newly built, vacant properties. Anything else to do for analysis of bare land and to justify as many discounts as possible? Thanks.


Owning land for the sake of owning land doesn’t make sense. Why do you want to buy the land? What is it that makes that land scarce and potentially saleable? What is its’ highest and best use? From what you describe it sounds like residential housing is its’ best use. In this market, it sounds a bit speculative to me.


I’m not owning it for the sake of owning. Like I said, I expect to hold it for 10-20 years when the market comes back up. Just like the market has before, and will again. This land is in between a lake and a mountain, about 1-2 miles from lake sore to mountain benches, thus, land in this specific area is limited. Also, about 10 more miles down the road from this community, the mountain is solid granite rock right to the lake sore. Thus, they can only expand so far south. There are perks for building in this area; obviously, the mountain and lake views. There are several hundred houses already built in the local area and construction continues. There are golf courses, boating docks, and other things you’d find near lake shore property. The biggest thing that I think of is the plans to build a bridge over this lake right into the main downtown of the city on the far side. At that point, all real-estate in this area will jump because these houses will not only be away from the city, they’ll be away from the suburbs, too. Yet, people will be able to take the bridge across to get to work. Right now, its literally over an hour to drive around the lake, just to drive back down the other side to get to the main city. If you live on the side of the lake closest to the city, its about 10-15 minutes drive into work. Again, as I said, the projections for this bridge are 10-20 years. As they keep building in this area, and more and more people get sick of that hour+ drive (over the next 10-20 years), demand for that bridge will increase. Also, as I said, other similar sized plots of land in this area sell for easily twice this price. Thus, my interest in it all of a sudden. I’ve mentioned most of the general items of this area. What I need now are how to evaluate the hard numbers.

Snooping around, digging around, and/or performing due-diligence :wink: , I’ve come to discover that another builder in the area has placed some of their plots of land up for sale at an auction. From what I can tell, they bought 500 acres for $22 million, making that $44,000 per acre. They are starting the auction bids at $20,000 for 0.06 acre. Researching the initial plats I found that started this post, those are being offered at roughly $20,000 for about 0.20 acres. Just from that, I would think this to be a good deal. Full acre lots are typically going for $200,000+ in this area.

As a side note of curiousty, there seems to be a $36.5 million judgement/lein on the entire subdivision of the initial plats I found. Fun, huh! This whole area is a big, over eager, over-built mess. However, that is what’s making for all the low prices; supply and demand and all that economics stuff. Perhaps that’s why this builder is trying to get these plats sold off - for payment on the judgement.

Anyways, as I said initially, I unfamiliar with how to evaluate bare land well. Does anybody here know how to run numbers for something like this?


I hate to tell you but LAND BANKING is a very good business. It requires strong holding money to survive and very profitable. land values can increase if bought in the right location. if the land is residental it will increase when prices go up again in several years and a buidling boom its.
Advice is, goto the county court house and speak to someone in zoning office and see what the land is zoned for or can be zoned for easily. This is how values are put on land.

Ex. if your in an open area and the land is A1(arrigcultural) and you can get it changed to industrial M1 you would see the land value increase by 10X its value most likely. Corner lots on main roads are great if you can get them zoned for gas stations, car washes, Walgreens type places, etc.

If you can get a great price jump on it… many investors sold there properties for land banking…

other things when you own large parcels (10+ acres) is land mining first. Selling the dirt and minerals, then developing. Hey it needs to be dug up anyway.

you do need to have a land survery done and have it checked for toxins really