There are several sectors of our economy that aren't getting the highest and best use of their vacant lands. In this sense, many are ripe for new residential development but lack the liquidity or expertise to do so. Underutilized industrial land, small towns, church land, and vacant land near golf courses are but a few examples of this scenario.
These present opportunities for real estate investors to engage in small-scale new-build developments, whether they're single-family homes or small multifamily. Here's an overview of development opportunities you may not have considered yet, the pros and cons of each, and whether real estate investors should try to get in on the action.
There are thousands of industrial land parcels across the country that aren't being fully utilized in terms of land use for their intended purposes. There are many reasons for this: lack of demand for industrial land, a poor local economy, and the location of the land may not be ideal for businesses.
Conduct a survey (Google searches, broker, listings platforms) of several hundred miles from your desired investment location: What industrial parks or areas exist around you? Are they full? Is there some underutilized land that could be developed? What zoning changes would need to happen?
Once you do find potential land, you can come up with a plan and proposal for redevelopment. For instance, you could propose a small scale residential block on the outskirts of the park. Or, and this is my favorite, build a couple of contractor yards each with an ancillary dwelling unit. This is a newer model of live-work that combines industrial and residential and aims to make the lives of contractors easier and more affordable.
Believe it or not, municipalities across the country offer free land to developers with a plan. Finding the towns in your vicinity and contacting them about any of this type of land wouldn’t take up much of your time.
Sometimes the local jurisdiction will have a specific plan in place for the land -- commercial, retail, residential, industrial, etc. -- but are looking for a developer to make it a reality. That could be you.
Even if the town doesn’t have a proposal in place, conduct an initial survey of the land available to see if there are underutilized parcels of land. I guarantee that there are. Consider park land. Typically, there's a significant amount of vacant land surrounding those types of lands. But wouldn’t it be nice to have a few well-designed new housing units surrounding the park to attract young families to the area?
It never hurts to take your local counselor or town planning official out for a coffee to discuss any potential opportunities for development.
Bloomberg reported last month on the declining attendance at churches and the excess land that they tend to hold. This is an important opportunity for church leaders and developers to partner together to create housing. This includes affordable housing.
Parceling off land to build some sort of residential project can be a revenue generator for both churches and developers alike. It can also bring people closer to the church. This is good for the city as well, as most church lands aren’t taxed, making them a revenue drainer for municipalities.
Golf course membership and usage have been declining for a while now. But, the good news is these large parcels of land are prime for some sort of real estate development. This is not to say bulldoze the golf course to build a suburb, but consider land surrounding the course that may just be vacant or underutilized for small residential developments.
Conduct a survey of all the golf courses near you, and look at the satellite and zoning maps to see if there are any underutilized areas within the course property itself. It might be worth having a discussion with the owner, as this will add a new revenue generator for them.
The bottom line
There’s opportunity everywhere. These are just a few ideas for investors to deploy to create win-win scenarios with other business owners of these types of land. In most cases, lands that fall under these categories are not living up to their highest and best use. You can change that.
Income-sharing is a perfect way for investors to create a win-win scenario and potentially scoop up developable land for low or no cost.