Option 1 subdivide the property and sell the portion


Suppose that you own a 20-acre piece of property you bought years ago as an investment property. There's an old house in the center of it with a tenant who has a lease that does not expire for more than a year (remember, that the lease is a binding contract that cannot be broken involuntarily). 

However, the lease does not give the tenant the right to use the entire property - just "a reasonable portion" in the middle of the property.

You recently found out that Amazon has plans to build a distribution center nearby; this will bring a lot of development and demand for housing to the area. A developer wants to buy the property from you so they can build a residential development of single-family homes. However, they do not want anything to do with having tenants while developing the land. 

Being a "first mover" to develop residential housing is strongly to your advantage, but not necessarily the most important factor. What should you do with your "bundle" of rights?

Option 1: Subdivide the property and sell the portion without the house on it.

Option 2: Wait for the lease to expire and then sell the entire lot.

Option 3: Join with a group of investors who want to buy out the tenant (at any cost) develop the entire property.

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Business Economics: Option 1 subdivide the property and sell the portion
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