David is correct.
Land is one of the least desireable investments you can make. It has to appreciate about 25 percent per year to pay for the carry,etc. You cannot write it off,cannot depreciate it, and must pay the taxes every year. Plus all the other things that David mentioned.
Only the very large developers will go into a new area and start developing and they may spend years evaluating and planbning prior to doing so.
Do you have a “track Record” as a builder with a "Marketable, sellable floor plan, for the houses you intend to build and the financing of the project?
Speculation Building is one of the riskiest real estate ventures you can go into.
By all means have soils tests done before you do anything else. It may not be buildable or may be contaminated to the point that it is economically unfeasible to clean and build.
Looking at buying 14 acres of former industrial land in a metropolitan area that is zoned residential. This would be an in-fill type project. The seller does not have an asking price and wants us to make an offer. Anyone have a good methodology for valuating land that will be converted to residential usage?
Posted by David Krulac on June 07, 2003 at 07:10:27:
how many lots can you get?
what infrastructure needs to be builT, streets, water sewer, utilities, curbs, side walks, street trees, street lights. etc. What does infrastructure cost?
Approximately 50 lots. Essentially there is no infrastructure, it will all need to be built. This is a brownfield, which is my expertise. There is a small stream in one corner of the property.
Developing raw land is my expertise… - Posted by David Krulac
Posted by David Krulac on June 08, 2003 at 18:40:48:
bownfield expertise is a definite plus, but you need good costs figures for the developmental costs? Just to run the plan could cost 6 figures and several years. At the end of that time without fianl approval you could be wiser but much poorer. You can end up spent the 6 figures and NOT getting approval.
The last plan we ran needed muncipal, county, 2 state agency and federal approvals. Just getting everybody to review the site is time and money consuming. Engineering costs are also very high. Usually having a brownfield project helps in that governments want to see it redeveloped, but that does not of itself insure smooth sailing.
What’s the finish value of the development? How much time and money will it take to get from here to there? And is there any/sufficient profit to make the project worthwhile? Good luck, you’ll need it.