Ive come across a parcel of land for sale thats almost 8 acres in an “inner ring suburb” of my area. it has some nice features, most notably a fishable creek. This might also prove to be its downfall…(wet lands or flood plain).
I havent gotten very far in my investigation but wanted to hear some thoughts on my idea of cutting it in half and subdividing one half into 8-10 lots, keeping the roughly 4 acres for myself.
There is a small 2 bedroom “cabin” on the land and it appears the “Back 4″…is farmed. City water and sewer are in place to the existing home. I realize that there is probably 35-50 grand per lot to grade and provide utilities and would plan on renting/ living in the shack for a few years while I build a house on the back side adjacent to the creek.
Odviously the realestate market is
right now and there is a surplus of housing&
#160;but buildable 1/4 acre lots in the area are going for about 100-125.
In my head if you could provide an “exclusive” feel with a small common green space/ park and play up a green housing angle (which I would try for anyway) I might just be able to pay for the land and home I plan to keep?
What say you breaktimers?
Replies
I'd say, if you can get answers to the questions about potential flooding and that you won't be overextending yourself by making the purchase, do it.
I'd probably do the subdivision first, get one lot up to approval standards, and build on that one. Live in it for two or more years then sell it and take all the free profit allowed by the federal tax credit on capital gains from such a sale.
If you're able to live that way indefinetly, moving your family down the block to a new home every couple of years, you could become a minor land baron at leasure pretty easily. Large tax free income is hard to find any other way.
It's a great plan. That's how developers make their money.
A trip to the city will tell you a lot about your plans. It might take more than one trip to figure things out though.
The bad market might be your ticket to getting this property. In some markets, it wouldn't be available or it already might be sold.
Bob's next test date: 12/10/07
Zoning is everything. Know it.
I might just be able to pay for the land and home I plan to keep?
Worked well beyond that for me. Twice, and looking. My last close call (but no cigar) is now part of a city park.
PAHS Designer/Builder- Bury it!
In my area, there are tons of rules and regs you have to follow in order to sub-divide. I'm sure it's similar in many locations. The time spent putting together proposals, plans and meetings with the planning board can run into serious money. There are often restrictions on how many lots you can break out in an amount of time. Projects may have to be cut into several phases, over a few years, before the entire property can be divided. Roads, sidewalks, drainage, all have to meet strict standards. They specify everything, from where you can put something to what materials you use. Building the houses is the easy part. You don't want to find out you are in a protected wet land zone or are required to do a traffic impact study after you buy the property.
My town puts the toughest regulations on sub-divisions. The roads, utilities, lighting, signage, fire hydrants. have to meet the strictest standards, all at the developers expense. Even though the surrounding homes and roads don't have street lights, granite curbs, sidewalks, etc. the new sub-division has to. These are what drive the cost of lots up, the actual cost of the land is only a small part of it. I think I'd do a lot of homework, first.
Beat it to fit / Paint it to match
I never have figured out how developers make money on subdivisions by the time they spend the money on planning,roads and sewer etc. it just doesn't seem to addup.
But I can see buying this property building a nice home on the stream side and waiting out the downturn and then selling off the part he is talking about developing at a nice profit without all the headaches and expenses.
ANDYSZ2WHY DO I HAVE TO EXPLAIN TO FRIENDS AND FAMILY THAT BEING A SOLE PROPRIETOR IS A REAL JOB?
REMODELER/PUNCHOUT SPECIALIST
"I never have figured out how developers make money on subdivisions by the time they spend the money on planning,roads and sewer etc. it just doesn't seem to addup."It's a business, like any other: buy at wholesale, add improvements, figure out all the costs, markup, sell...at a profit.All parcels wont work because of buying price and limits on development. Bob's next test date: 12/10/07
Someone mentioned zoning. That is key. What will the zoning allow you to do with that land? Once you know that, you need to verify that there is available capacity for sewer and water. Just cause the pipes are there, doesnt mean that they will allow more people to connect in.
Meet with city manager, discuss your thoughts, and ask about the process and if it is something that the city would welcome. (Even though you might be in your legal right do do something, government can torture you into bankruptcy if they dont want it done) It is better to work with them than fight em.
Also find out about the cost for utility connections.
You will need a design engineer and you need one that wont drive you to drink more and that wont overcharge. They also need to know how to get stuff approved in your jurisdiction. Talk to everyone and anyone you know and get referrals. That is the best way to find anyone and engineers are no exception. Sometimes even the City Managers will tell you who has done a good job on their submittals and who works well with the city. (even thought they can not legally refer engineers)
There is a lot to it, but it can be a great source of profit and estate value.
The idea of building and living in a couple for 2 years and flipping without tax consequence is a great idea as well. It would certainly help generate interest in the community cause people would see activity which would be a great thing.
Also, find a good bank to partner with cause the improvements will require bonding, bank loans, etc. Since you have not done this before, some may be leary of you so have a good plan, be organized and present yourself well.
joemilw
There is a way to do this really easily.
but first, do you violate the basic tennant of realestate,
Location, location,location!
What sort of property surrounds this site? high end,, low end rental, commercial? That tells you more than anything..
Next find out if you can build.. (Don't ask about developing, find out if you can build the house you want on the site. If you can don't worry, buy flood insurance and let uncle sugar take the risk.. apparently he wants to. It may never flood....
when you build your house site it so that there won't be a conflict with the other property when you divide things. If you go back far enough to old enough records you'llsee where someone planned that area to be divided up. If not, that's a big warning sign that you might be in for a fight..
all the replies you are recieving are good in that they are telling you to look more closely at the parcel before jumping
sometimes its better to take a small sum of money off the table without risking a large sum of your money
if there is a possibility of getting it approved try selling it as a proposed plan of subdivision
in my area 8 lots wouldent be worth considering as the costs of subdividing are almost the same for taking 8 or 80 through the process (16) govt departments
having been a developer for many years (25) i have a lot of bruises to show for it
my site is at http://www.foxfireridge.com
Wow Dude:
I thought we had it bad in the states with Bureaucracy. That is impressive.
Each state has different laws and depending up on the state law, you may be dealing with the county government, town government, city government, etc. but in my experiences it is 4+- agencies.
1. Stormwater Management-In the areas I have worked in, it is mostly County oversite of state and fed. Laws.
2. Wetlands and floodplains. That is either State dept of environmental protection or the Federal Corps of Engineers.
3. Sewer: Local government, or whomever owns the sewer systems and perhaps state oversite of sewer discharge.
4. Water: Sometimes super easy, water company, sometimes nightmare (New Jersey)
5. Local Government for subdivision of land.
I feel lucky now!!
here the feeling seems to be that any developer is a cash cow ready to be milked
Having worked with architects and engnieers for years doing this, I'd reccomend a comprehensive topographical survey and floop plain study before planning where the lots would be. If the creek has a history of flooding, and presently is in a unimproved area, then you need to draw a contour at the 100 year flood elevation and allow no permanent structures within. The survey would also indicate trees worth saving, and other features that woud affect the size and number of potential lots and make them more appealing.
Every dollar spent in planning can potentially return hundreds in the market.
Go back and read everything that 'JeffinPA' and 'dude' have posted, then read them again. I have found every one of their comments to be correct. Remember, every person who has any connection with the political jurisdiction is a potential ally.
I have been a builder/remodeler for 15 years and developed our first piece of land 2 yrs ago. We currently have 18 of 22 lots sitting vacant. We're learning that being a eperanced remodeler doesn't sell property in a bum market.
Also, align yourself with an experienced excavator, one who has installed subdivitions of similar size in your area. Maybe even offer some sort of option on a lot in exchange for his consultation/investment.
Ask excavators, city planners, anyone you meet for referals of a good (and local) civil engineer; design details can make a huge impact on construction cost.
Add about 20% to your final construction estimates for unforseens, finance charges, new city requirements, etc, etc, etc. We may know everything about building homes, but this is a new venture. Enter with the same caution you would use to enter any other industry.
Good luck
Are you attempting to sell your lots to other builders or are you trying to build the entire sub yourself?What are the terms that you are selling on. The developers back home sold everything on Land contracts: zero down and just make the note payments. Bob's next test date: 12/10/07