Would you buy land that is too small to build on?

Had an offer accepted this week and then discovered that the lot size (8000 sq ft) is smaller than the local zoning ordinance for residential builds (20,000 sq ft minimum). I have actually had this happen 3 times in the last few weeks in different counties and I have passed on all of them.

It's a good property otherwise and includes access to a private beach on a very nice lake, but from the "highest and best use" perspective, I can't really see what anyone would do with this land. I called the county and lobbying for a zoning change seems unlikely. I managed to track down a nearby landowner in this private sub and he has no interest in buying this lot OR selling any of his lots (I think he purposely bought every third property in the sub to prevent anyone else from combining lots to build. He has effectively created his own private little sub with his own private beach).

I can get the property in question for about $900 all in and market value is in the $2500 range. (I know, I offered too much) If I can sell it at or near market value it's worth it to me, but now with the lot size issue I feel I will have to compromise profit and/or time to sell in order to make anything decent here.

What do you all think? Is a property like this worth it? Do you ever get stuck with a property that just won't sell due to an issue like this?

With those headaches and margins I’d definitely pass.

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Personally, I'd pass if it couldn't be built on.


Are there any neighbors you could sell it to?

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Thanks for the advice everyone.

@DanielC can you park an RV, a tiny house or a mobile home on the property? It might be worth investigating that. I know those types of properties are usually in high demand.


@DanielC, I agree with @jaydensdad7317, see if the neighbors are interested before you walk away.

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@retipsterseth that is what I was thinking, especially with access to the beach on the lake. RV spot or even campground.

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@Michael-Russo Yeah, my first deal was a somewhat similar property: small lot with lake frontage, very difficult to build on, etc. I ended up finding a buyer through Facebook, but if that didn't pan out I was planning on putting up flyers at nearby outdoor sports stores, bait shops, etc. I had the same thought; someone out there would probably want to fish/camp at their own property at the lake.

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@dl7573 - that can actually be a huge deal for some folks (what they're really after is having easy lake access, not so much building a home on the lake). It's crazy how many hidden opportunities there can be in land... potential uses and value that aren't readily apparent at first.

@retipsterseth I agree, and it's funny, my first deal also had similar numbers to the ones that @DanielC originally posted in this thread, in that I was all-in on the acquisition side for less than $900, and in my case the county's appraised value was about $2,000 or less, due to lack of direct comps at any point recently, and the issues with ability to build and access (couldn't even drive to my lot, just paddle / trolling motor to it from a public boat launch less than 1/2 mile away). It was just such a totally unique property in the particular area that there was no way to really know market value, but I believed it had to be worth considerably more than $2,000 to someone, so I listed it on Facebook for $19.9k, got a ton of inquiries, most of which fizzled once they realized the access issues (which I disclosed in the listing that they didn't read), and negotiated a deal with a buyer for $8,300. It sold fast too - under contract within a week and a half of closing on my purchase. I possibly could have gotten considerably more if I wanted to sit on it, but didn't want to push my luck and risk losing a bird in the hand.

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I found an infill lot that is too small to build on. There's a neighbor that seems to be parking vehicles (and storing junk) on that adjacent property. The neighbor's property will not accommodate all of those vehicles. So, it would seem that if I purchase that property and offer to sell to the neighbor their only other choice would be to move all their junk (before I stake claim to it). It also appears that they built their house too close to the property in question and have violated the setback.

@SuitedConnector, that sounds really interesting...although I wonder if there could be any issues with adverse possession? I'm not a lawyer; I've never dealt with an adverse possession issue myself; and I believe those laws can vary from state to state anyway; but it might be something to look into, unless you were able to pick up this property for next to nothing (some amount you wouldn't mind losing if the neighbor actually successfully pursued an adverse possession claim).

Edited to add: Then again, if you got the property cheap enough that you could afford to sell it to the neighbor for less money than he'd likely spend on legal fees to pursue squatter's rights, then it might be a winner either way...unless the junk-storing neighbor happens to be a lawyer, or has one that owes him a favor. :-)

@dl7573 Yeah, that's exactly what I've been thinking. I have to check with an attorney on that because the neighbor has owned their property for 10 years so they've probably been using the other lot for a long time. I have to review the statute and consult an attorney.

Then again, if you got the property cheap enough...

I was just thinking that, because I can purchase for $700 and the market value is $6000+.

@SuitedConnector That definitely sounds like you'd have some room to work with, in terms of potentially selling to the neighbor for a price that should be competitive with what one might expect a contentious legal action to cost. If it were me, I might get it under contract and then approach the neighbor, before closing, to get a read on what they might do. Are they the disagreeable, arrogant type that already feels like they own it and would rather spend thousands of dollars fighting you than buy it off you? Or are they the more reasonable type that recognizes this for what it is - an opportunity to clear up a potential liability for themselves in a way that's fair to everyone involved. If it's the latter, and your contract with the initial seller is assignable, maybe you don't even have to incur closing costs, so whatever amount in excess of $700 you can get the neighbor to agree to is all profit for you. Just thinking out loud.

If it has water access and is less than a grand, buy it. I would check if you could park an RV there, and/camping is allowed. Or possibly build a shed (boathouse).

SO many people want lake access.

There also is a market for small useless properties for investors that pack their portfolio with cheap properties to build their net worth and get a portfolio loan on their assets.

I would mention to the buyer that its too small to build and try to lower the price, but either way, buy it.

No. I turned down two such deals in September. One was too small and triangular. The other was so small you couldn’t build anything without buying at least six other parcels of land.

I’m sure there are land investors who specialize in what some of us deem is “worthless land.” It’s a niche within the land niche.