What should I do with this property?

Land Investing
1

Hey guys!

I have a property in southern Indiana in a pretty solid area - Bloomington hosts the largest University in all of Indiana.

My property is just shy of 12 acres and is 20 minutes from downtown. It's in the country but it's still pretty close to the action.

It has a modular home and a trailer on it that combined, pays $1007 per month!

The problem with selling it has been the tenants though - the structures are in terrible shape and the tenants are a little rough around the edges. They've always paid on time and I've had no trouble with them, however, whenever we list it and get showings... people get spooked off for some reason.

A part of me wants to keep this property, but a part of me wants to just move it...

I've done some research on the allowed uses and they are as follows:

Agriculture:

  • Aquaculture* (fish or shimp farm)
    • Permitted after site plan approval by the Plan Commission or Administrator
  • Agritourism / Agritainment (i.e. corn mazes, petting zoos, hay tunnels)
  • Christmas Tree Farm
  • Winery
  • Equine Services* (Horse riding)
    • no conditions

Residential

  • Single Family Dwelling
    • Permitted on existing lots of record after the issuance of a building permit by the Building Department.
  • Two Family Dwelling (duplex)
    • For zoning districts that permit two family dwellings, the following conditions shall apply: A. The location of lots designated as two family dwelling lots shall be approved by the Plan Commission as part of its approval of the subdivision plat. B. Exterior building materials of dwelling units to be placed on two family lots shall be of the same type and quality of the existing dwelling unit or, in the case of new two family dwellings, of the same type and quality of dwelling units on adjoining lots. C. Each two-family dwelling shall have a lot area equal to twice that required for a single family residence or greater. D. A two family dwelling proposed on a lot or parcel of record created via the Sliding Scale Subdivision Option may only be constructed on the Parent Parcel Remainder and only if that Parent Parcel Remainder meets the minimum lot size for the zoning district in which it is located.

Public and SemiPublic

  • Religious Facilities
    • Permitted after site plan approval by the Plan Commission or Administrator
  • Cemetery
    • no condition

Business and Personal Services

  • Tourist Home or Cabin
    • Criteria for Tourist Home or Cabin uses in AG/RR, FR, and CR zoning districts: (a) The lot must meet or exceed the minimum lot size and infrastructure facilities (i.e. septic system, driveway) requirement for the zoning district prior to the commencement of the Tourist Home or Cabin use; (b) The Tourist Home or Cabin shall be located no closer than two-hundred (200’) feet from any adjoining principal use structure not currently being used as a Tourist Home or Cabin or from the adjoining property setback line if no adjoining principle use structure exists. (c) Any outdoor pool or spa facilities must meet State and Local Board of Health requirements and must be visually screened from surrounding properties and properly secured with a Power Safety Pool Cover or Enclosure as defined in Indiana Code (675 IAC 20-4-27 - Safety Features; 675 IAC 20-3-9 – Enclosure) standards for a Class C, Semi-Public Pool. (d) Parking: (1) Parking only on paved or graveled driveways; (2) No parking is allowed on the street or road; (3) One (1) parking space per guest room; and, (4) No parking of any vehicles in any yard or setback area as defined by Chapter 804 of the Zoning Ordinance. (e) Rules, in a readable size and format, shall be posted outside near the main entrance to the Tourist Home or Cabin and shall include the following: (1) Rules and regulations for ensuring safety and preservation of neighborhood values (e.g., emergency phone numbers; 24 hour contact number for property owner or manager; noise restrictions; solid waste management rules; fishing license rules; etc.); (2) Diagram of property boundary lines; and, (3) Diagram of designated parking. (f) Smoke detectors and a fire extinguisher shall be installed and maintained in working order in all Tourist Homes or Cabins. (g) All solid waste and refuse shall be removed from the property and properly disposed of prior to a change of occupancy. (h) No more than two (2) guests per guest room.
  • Temporary / Seasonal Activity.
    • Any sale made by a person, firm or corporation engaging in the temporary business of selling seasonal products or engaging in events either retail or outdoor in nature, on property owned or leased by the person, firm, or corporation. The following list identifies the kinds of temporary / seasonal activity: Outdoor art or craft show or exhibit; Christmas tree sales; Fireworks sales; Car Tent sales; Food Trucks; Outdoor public, religious, patriotic, or historic assembly or exhibit, including a festival, benefit, fund raising event, or similar use that typically attracts a mass audience; For temporary uses that are not listed above, the Director shall determine whether an unlisted temporary seasonal activity use should be classified as a temporary seasonal activity. This determination shall be based upon the similarities and differences with the above listed uses and an assessment of the proposed temporary seasonal activity’s compatibility with the zoning district and surrounding land uses.
      • Temporary Seasonal Activity uses shall be permitted upon demonstrated compliance with the following conditions:
        • A. Use must be short in duration (generally less than 1 month.)
        • B. Signage for use limited to 10 square feet and comply with all other aspects of the signage chapter of this ordinance.
        • C. Each use requires submittal of a site plan - including but not limited to location, signage, parking, driveways, etc.
        • D. Prior to the beginning date of the activity, an Improvement Location Permit and payment of applicable fee shall be required.
        • E. Operational conditions such as hours of operation, expiration dates, etc. may be considered as part of the Improvement Location Permit approval.
        • F. Subject to the performance standards of Chapter 802 of this ordinance.
        • G. Temporary Seasonal Activity approvals may only be granted for individual parcels; they may not be authorized within any public right-of-way (e.g. streets or sidewalks). Chapter 802/Page 45 Revised 01/24/2018 H. Application must be submitted at least ten days before the requested date for beginning the Temporary Seasonal Activity use. I. The application must include the signature of the property owner, or a letter of authorization from the property owner
          • The temporary / seasonal activity must be subordinate to or incidental to the principal permitted use or structure existing on the property, and compatible with the intent of the district.

Amusement and Recreational

  • Camping Facility
    • Camping facilities shall be permitted provided applicant submits a site plan pursuant to Chapter 815 and proof of licensing by the State Board of Health and proof of compliance with all applicable standards set forth in 410 IAC 6-7.1.
  • Recreational Vehicle (RV) Park Conditional use
    • 53. Only permitted on lots 5 acres or greater in the AG/RR, CR, and FR zoning districts.

Would you guys try to do something with this and keep it, or would you just sell it?

Trying to make an RV park might be cool... but it's 4 hours from me... thoughts?

2

@Jarenb That's an interesting one. Honestly, for me personally, it would probably freak me out a little if multiple other investors (who knew they were going to look at a property with a modular home and trailer on it) were getting sketched out and backed away. Would you make money, relative to what you paid for it, if you dropped the price a little to sell it as-is? If it meant breaking even or not making what you want to off of it, I'd probably keep renting it a while as long as the tenants are paying on-time and you're making positive cashflow on it each month. I guess I'd also look at when the tenants' leases are up. You could always not renew, and then if the condition of the trailer makes it more liability than asset, maybe you could give it to somebody for some salvage value, or for free as long as they haul it out of there, if you thought you would actually make more money selling the land without the current trailer or tenants on it.

If you did hold onto it, and were thinking about some of the more creative uses...

It's funny, I was just talking to a guy the other day who's been doing aquaculture/fish farming for a few decades. He was telling me the only people who should go into fish farming are people that are already millionaires and don't mind losing a bunch of that money. :-D Maybe he just thought I was seriously considering it, though, and wanted to scare away some competition. Seriously, though, it sounds like a significant investment in tanks and equipment, and from what this guy told me, good access to free, clean water is critical.

I feel like Christmas tree farming, while certainly a long-term play, could be pretty cool -- extra annual income with little work (I'm assuming, but could be totally wrong) most of the year. I've heard that more and more farms have been scaling back or closing down, and some years recently the price of live trees has gone up considerably as a result. If you have good land for it, maybe you could find a tenant that would be interested in managing this for you, for a share of the profit.

Most of the others (RV park, short term rental) sound like considerable effort to keep running, especially from 4 hours away.

3 Likes
3

@Jarenb That's some diligence on exit strategies right there. Props.

I don't know how much you paid for it, but a reliable $1k per month without losing equity sounds pretty good. You said it yourself in a different post that you'd go for the $10k per month for the rest of your life than $1 million now. You're 10% there with this property! Haha. Of course, if the tenants stop paying or you have trouble finding another tenant after the lease is up, then sure, but for now I'd personally probably keep it as is, and focus on other investments.

You know I'm in Bloomington, so if whatever you choose requires some boots on the ground, then let me know. :)

3 Likes
4

Is subdividing possible? If you can keep road access to all the subdivisions, then you could have a winner! Maybe keep the cash flowing rental (~2ac) for your portfolio then divide the remaining 10 acres into (2) 5-acre lots or (4) 2.5 acre lots. Seeing that a RV park could be built on 5 acre+, I’ll bet they will fly off the shelf! Especially only being 20 minutes from downtown. Let us know how it goes!

1 Like
5

I see two options.

1. Move out the residents, either rehab the modular or tear it down.

2. As stated by another person, invest in it and convert to trailer park if possible, but then that’s going to suck a lot of your time. My goal as a land investor has always been minimal time suck.

6

@dl7573 wow! Thanks for the in depth thoughts on this. I agree I should probably just dropp price and try to move it... but something is holding me back on this property!

Call it intuition or stupidity haha :-)

It all does sound like a lot of effort to keep running especially from 4 hours away....

7

@oranjoose Man! That's kind of you. The issue for me isn't the cost of the property it's the terms on my financing.

I'm definitely not cash flowing on the hard money loan I have in place. I actually found a local lender who will refinance on land up to 65% LTV so I'm going through that process now.

Maybe if I can get good financing in place, I could just keep it as a rental... I just have this feeling I'm suppose to do more with this property but I'm trying to figure out what exactly.

Do you know anything about RV parks lol?

8

@AFlanagan I've thought about it the problem is that to access the property you have to go through the yards of the two acres where the modular and trailer are.

I'd have to develop a road, which is expensive (I think?). Maybe not as a expensive as a fish farm or other options lol!

9

@Jarenb Gotcha. It makes more sense now why you're itching to move it.

RV parks can be lucrative, but only in the right instances. The location is good enough, right off the interstate. And this far north, you wouldn't have to worry about it for several months of the year.

As for building it, in Monroe County, RV parks are conditionally permitted only in AG (agriculture/rural reserve), FR (forest reserve), or CR (conservation residential), if I understand correctly. If your parcel is not classified as such, you'd have to first get it re-zoned, which can be difficult. Then, even with the correct zone, you have to get the use permit through the county which I understand requires presenting all your plans for the park. Neighbors probably have a voice in this too, and RV parks are one of those things that neighbors usually don't like to have around.

Building the RV park, especially up to Monroe County's somewhat-inflated standards would probably be pretty expensive, especially in the paving and landscaping (unlike other counties which would be more fine with gravel). You would have to get engineering studies and approval from the department of health, which would run you probably more than $20k from what I've heard. You'd have to install electrical and water for each RV site, and I'm betting you'd have to install sewer for each site too (I doubt Monroe County would allow a single dump-site in the park). RV park owners say the rule of thumb is to budget around $25k per RV site, which is probably not far off the mark for this county.

Then there's management. The rule of thumb I've heard is that RV parks with fewer than 50 sites don't have enough margin to earn much if at all with paid full-time management, meaning you would have to manage it full-time yourself for it to be worth it. Between 50 and 100 sites is good for a single full-time manager, with part-time employees. And over 100 sites can work out multiple full-time staff. There are some people dabbling with self-serve automated RV parks, but I imagine that would be even more expensive to set up. A self-serve park that close to town might be harder to keep safe too.