Will it be worth buying land from the government for the purpose of creating affordable housing? Now that an amendment has passed allowing the sale of federally owned land in Nevada and Utah for this purpose, we are going to find out.
Although these land sales will be limited to areas near cities like Reno. Las Vegas, and St. George, there will still be plenty of questions which, from here, appear to heighten the risks. Since these parcels are "further out" from those cities, chances are there is little to no infrastructure like what would be needed for affordable housing properties. Chances are that right now there are few, if any, roads leading to the sites which will be made available. Transportation, shopping, and entertainment venues will be further away until or unless allowances are made for creating those considerations nearby. Doing so would likely take years of time and additional legislation.
Another factor, often overlooked in a preliminary property situation, is how bringing affordable homes to people in these areas would likely take two or more years to happen. By that time, many feel that something will "have to give" in the overall real estate market. It is possible that the bubble could burst on home prices between now and when the first properties become available. Construction which needs new infrastructure, streets, and utilities typically costs more and takes longer. Being built with affordable housing consideration may add constraints. What happens if the estimated rental income at the time of groundbreaking turns out to be too high upon completion?
Since this is federal land, the municipalities may not be able to add tax and/or financial incentives to the extent they normally would.
This is where thinking out of the box could come in handy. Instead of waiting on the parameters of federal land development, right now could be a good time to seek property near these communities which is privately owned but not developed. Chances are there would be fewer challenges and a faster path to development.
As a developer, investor, broker, or contractor, the goal is to find and take full advantage of opportunities. Many people would see this federal land possibility, raise the same questions I did, and move on. If you research the possibility, you might find a more viable solution. It's one of the ways my team and I can help you and your team succeed.
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