Residential development advice needed - Posted by Eric
Posted by Eric on May 28, 2004 at 16:29:34:
Residential development advice needed
I?m new to REI, and have been researching it for a few years. I planned to start small, but an opportunity has presented itself that I would like to take advantage of. I live in an upscale neighborhood (250k to 4 million dollar homes). My house backs up to a piece of undeveloped land (10 acres). This is a heavily wooded piece of property with frontage to a medium traffic city street (opposite side of the property). I would love to simply buy a small piece that touches the back of my land, however the owner is not willing to sub-divide. The only way I can buy a piece is to buy the entire tract and develop a small neighborhood, which I am willing to do, if the numbers are good.
I understand the first thing I will need is a civil engineer to plan the neighborhood, what is a reasonable cost for that?
What can I expect to pay for utilities (water, sewage, gas, electric, cable, and phone) for say 26 lots?
I am planning roughly 30,000 sqf of concrete for the street (single street running down the center with a cul-de-sac at the end), what?s a good price per sqft for something like this?
I know there are many other minor costs, like attorney?s fees, etc. I am just looking for the ?major? factors to see if I should pursue this land.
The land is just a bit over priced (650k), but I am fairly certain that I can buy it for 600ish.
Now, purchasing the land with 20% down will eat up most of my available cash, are there some creative financing options out there to finance the improvements to the land?
The land is in a very desirable location, there are million dollar plus homes on either side (two homes on 5-10 acre tracks of land) with my neighborhood backing up to it. This is in a suburb of Houston, with typical lot prices of around 50k.
I?m not trying to make a killing on my first deal or anything; I?d be fine with 100k profit and ½ acre of land.
Am I trying to bite off more than I can chew? I know there is a lot more to residential development than what I have listed. I just want to know if the land + major expenses will kill the deal before I invest time and money in the engineer. Any advice/help would be appreciated.
Eric