Short answer: Most development land that sits on the market isn't a bad development. It's priced wrong. Land is only worth what the last buyer in line, usually the builder, can pay for it and still make money after their costs, profit, risk and borrow costs.
So if your land deal isn't selling, don't ask what the land is worth. Ask what the builder can afford to pay and still make a profit.
This is for you if you're a first-time developer, if you've done a deal or two that didn't turn out the way the spreadsheet said it would, or if you're an agent who lists and sells development land. Every one of these mistakes can be avoided before you ever buy the property.
Mistake #1: Not analyzing the deal at every exit
The number one reason development deals don't sell is that the seller thinks entitled land is worth way more than it is. Most people doing land deals are trying to flip it: buy it, get it entitled, sell it. That can work, but they price it off the wrong comps. In the Boise area there just aren't many good comps for entitled land.
Every stage of a land deal has a different buyer, and each one needs room to make money:
Raw land. Usually developers and land flippers. Most builders aren't vertically integrated, so they don't buy raw, unentitled land. The price has to leave room for entitlement costs, site work, time, profit and risk.
Entitled land. Developers and some builders buying a shovel-ready project. Leave room for site work, build costs, profit, risk and the borrow costs. Most developers and builders finance this stuff, and the cost of money is the part people forget most.
Finished lots. This is where most builders buy. Leave room for build costs, selling costs, profit and money costs. Risk is lowest here because a builder can build and exit in about 6-12 months.
Finished homes. This is where 99% of owner-occupants and investors buy. It has to be priced to what the market supports per square foot, or what the rent covers on the loan.
The other half of this mistake is never figuring out the best thing to build. If you're only planning to flip the land and you let an architect plan the project, they'll make it look pretty. They usually won't scrutinize the floor plan, the unit count, or the build cost per square foot against the sale price per square foot. That's the highest and best use, and it changes the land value a lot.
Take a 2-acre lot. 20 lots that sell for $100,000 each is $2 million. 60 lots that sell for $85,000 each is $5.1 million. Same dirt, very different land value, all based on how you get it entitled.
The product has to fit the neighborhood too. If homes nearby sell for $500,000 and you plan a $700,000 product, it won't sell, and builders won't buy your lots because they can see it won't sell at the tail end. You can't price the land until you know the best thing to build on it.
We're vertically integrated, so we work every deal backwards from the finished product. We price each stage the way the most likely buyer would, and we don't assume every lot sells to an end buyer who's willing to go in the hole. If a deal only works when everything goes right, it's not a good deal.
Mistake #2: Going in with only one exit strategy
This is the land flipper's trap. The whole plan is to entitle it and sell it. Then something changes. Maybe you misjudged the entitled value, rates go up like they did in 2022, builders stop buying lots, or the city approves fewer units than you planned.
Now you're carrying the land, paying interest and taxes, and waiting on a buyer who's doing the same math we just did. If you only have one way out, the market decides whether you make money, not you.
We start at the end and work backwards. Every deal needs at least two ways out after the build: sell the finished homes, or refinance and hold them as rentals. Right now build-to-rent doesn't pencil on most deals because of where rates and rents are, even though Boise is one of the best rental markets in the country. So we also look at combinations, like selling half and keeping half.
And every raw land deal has at least 4 exit points along the way:
Concept: sell the idea on paper
Entitlement: sell the approved project
Horizontal: sell build-ready lots
Vertical: sell or rent the finished homes
Plan the final exit first, then make sure every exit along the way works for you, or at least that you can stomach the result if you have to take it.
Mistake #3: Not understanding the development and entitlement process
This is the most common one, even with experienced developers. Zoning code is different in every city and county: Boise, Meridian, Garden City, Ada County, Canyon County, Nampa, Caldwell.
Here's an example. R1C inside Boise city limits allows 12.4 units an acre. R1 in Ada County, outside city limits, allows 1 unit an acre. See "R1," assume it's in the city, and you just planned 12 units on land that allows 1.
Never buy a deal assuming you can rezone it, especially if you're not experienced. When rezoning is the strategy, we don't close until we're certain: after the rezone is approved, or with clear commitments from the city. Otherwise you can end up holding the bag and selling it for what it's worth under its current use.
That's why it drives me nuts when a listing says "the value is in the land." That's usually a sign it's overpriced. Say a 1-acre R1C parcel could hold 12 build-ready lots worth $100,000 each. Some sellers price the raw acre at $1.2 million. That ignores about $500,000 in infrastructure, about $100,000 in entitlement costs, roughly 2 years of time, and the profit the next buyer needs.
It cuts the other way too. A client who bought a lot we'd shown before planned to split off 1 lot. We showed him how to split off 2. If you don't know the process, you might be leaving money on the table.
How we avoid all 3
Our investors buy the deal, then hire us to entitle, develop and build it, so we're involved from due diligence on. That includes:
A 200-point due diligence checklist so nothing slips through
Thousands of scenarios run to find the highest and best use for your goals, whether that's build-to-sell, long-term rental, or midterm and short-term rental
Talking to every agency before anything is designed: planning, government agencies, design & other professionals, and utilities
Staying inside the box the zoning already allows, so the deal gets approved
Real example: a 2-acre Garden City deal stuck as build-to-rent
This 2-acre parcel in Garden City has been on the market for 3 months, and a buyer before that couldn't make it work. It's entitled for 60 three-story townhomes, a block from the river and about a mile from the new park at Expo Idaho.
The mistake was designing it only as a build-to-rent. At today's rates it doesn't pencil as a rental, and as a multifamily entitlement the units can't be sold individually.
The fix is converting it to a condo plat so each unit can be sold. That's what we'd have set up from day one, even if the plan was to rent. A build-to-sell setup still lets you keep some or all of them as rentals, and it gives you a way out if the market changes.
Based on our recommended purchase price, which isn't negotiated yet, the pro forma shows about $1.85 million in investor cash and a projected $4.65 million profit. That's a 3.52x equity multiple and a 51% IRR over 4 years. Because it's shovel-ready, it skips 12 to 18 months of entitlement time. We'd build to an absorption rate of about 20 homes a year, not all 60 at once, and the market could drop 20% before the project loses money.
Find your next infill deal
Most of our deals start at about $250,000 to $350,000 out of pocket, and some smaller lot splits come in under $300,000 and can still make six figures. If you already own land, we'll do a free analysis of what you can build on it.
I go live every Friday at 2 PM MT on Find Your Next Six-Figure Infill Deal, where I break down a real deal each week. Watch the full replay of this call on YouTube , or message me on Instagram @thatflippinguy.
FAQ
Why isn't my development land selling? Usually it's priced wrong, not a bad development. Land is only worth what the next buyer, usually a builder, can pay and still cover build costs, profit, risk and borrow costs.
How do you price entitled land? Work backwards from the finished product. Start with what the homes sell for per square foot, subtract build costs, site work, financing, time and the builder's profit, and what's left is what the land is worth.
What is highest and best use in land development? It's the product, unit count and square footage that make the most profit for that specific neighborhood. On 2 acres, 20 units vs 60 units can change the land value by millions.
How many exit strategies should a development deal have? At least two at the end, like selling or renting the finished homes. A raw land deal also has 4 exit points along the way: concept, entitlement, build-ready lots and finished homes.
Is R1 zoning the same in Boise and Ada County? No. R1C inside Boise city limits allows 12.4 units an acre. R1 in unincorporated Ada County allows 1 unit an acre. Always check which jurisdiction the parcel is in.
Should I buy land planning to rezone it? Not unless you're experienced, and even then don't close until the rezone is approved or the city has clearly committed to it.
What's the difference between a condo plat and a subdivision plat? Both let you sell units one at a time. A subdivision plat creates separate lots. A condo plat keeps one parcel but lets you sell each unit as a condominium, and it can let you start vertical construction sooner because the plat is recorded as you build.
