{"id":59538,"date":"2014-07-06T05:30:38","date_gmt":"2014-07-06T11:30:38","guid":{"rendered":"https:\/\/www.biggerpockets.com\/renewsblog\/?p=59538"},"modified":"2024-02-23T15:46:53","modified_gmt":"2024-02-23T22:46:53","slug":"2014-07-06-every-real-estate-investor-needs-know-land-cost-development","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/2014-07-06-every-real-estate-investor-needs-know-land-cost-development","title":{"rendered":"What Every Real Estate Investor Needs to Know about Land And The Cost of Development"},"content":{"rendered":"<p>Lately I have been contacted by several different BP members, wanting advice on the development costs for a parcel of land they own, or are considering buying.<\/p>\n<p>They want to know how much it will cost to build a house on a particular lot. That number is always dependent on the lot costs and which stage of development the lot is at.<\/p>\n<p>Is it a finished lot or undeveloped, etc.?<\/p>\n<p>It seems so simple, you see a vacant parcel of land, there\u2019s other homes around it, and you want to buy it and build on it. How can that be difficult?<\/p>\n<p>It\u2019s impossible for me or anyone else to tell you (without seeing your property) what it is going to cost to develop a specific parcel of land. I can, however, give you some starting points to help you begin to evaluate whether or not it makes sense.<\/p>\n<h2>Location,\u00a0Location,\u00a0Location!<\/h2>\n<ul>\n<li>Where is the parcel located?<\/li>\n<li>\u00a0Is it an infill lot where utilities are at the street, or in the country, where you will need to bring in services<\/li>\n<li>What are the sizes of the homes and lots in the neighborhood?<\/li>\n<li>What do homes in the area comp out for?<\/li>\n<li>Is there a demand?<\/li>\n<li>Are there views, close to shopping, beaches, lakes, recreation, amusements, etc.?<\/li>\n<\/ul>\n<p><em><strong>Related:<\/strong> <a title=\"Never Fail At The Location Game EVER Again.\" href=\"https:\/\/www.biggerpockets.com\/blog\/2014\/05\/14\/never-fail-location-game\/\" target=\"_blank\" rel=\"noopener\"> Never Fail At The Location Game EVER Again.<\/a><\/em><\/p>\n<h2>Topography<\/h2>\n<ul>\n<li>Is the parcel relatively flat, downhill slope, uphill slope, etc.?<\/li>\n<li>Is there anything on the lot that will need to be removed? (buildings, trees, junk, etc.)<\/li>\n<li>Will the design of the house required extensive excavation? (lower level garages, etc.)<\/li>\n<li>Will retaining walls be required?<\/li>\n<\/ul>\n<h2>Parcel<\/h2>\n<ul>\n<li>What are the dimensions of the lot?<\/li>\n<li>What is the current and future zoning of the parcel?<\/li>\n<li>What will be required by the local planning agencies in regard to set backs (landscaping, driveways, sidewalks, side yards, etc.?<\/li>\n<li>What are the height limitations?<\/li>\n<\/ul>\n<p>Once you have all that information, you can evaluate what the costs to develop the lot will be, and next what the costs of building a house on it are.<\/p>\n<p>You can have two lots, side by side, but because of variations in topography the cost to develop can be dramatically different. The devil is in the details!<\/p>\n<p>For a person with no experience in building from the ground up, there is far more to it than most people realize. If you have a lot that is on a hillside and needs extensive grading or use of caissons the costs add up quickly.<\/p>\n<p>If the neighborhood doesn\u2019t have comps to support a high dollar home, it\u2019s not worth it, on the other hand, if it\u2019s a multi-million dollar neighborhood, or has breathtaking views, it may be a bargain!<\/p>\n<p><em><strong>Related:<\/strong> <a title=\"The Truth About Real Estate Investing Partnerships\" href=\"https:\/\/www.biggerpockets.com\/blog\/2014\/05\/06\/partnerships-good-bad\/\" target=\"_blank\" rel=\"noopener\"> The Truth About Real Estate Investing Partnerships<\/a><\/em><\/p>\n<p>If you are inexperienced, you might want to consider finding an experienced builder\/developer to partner with on your first few projects. I hope this has answered some of your questions, though it\u2019s not meant to be a comprehensive list! \u00a0Next up, the cost to build a house!<\/p>\n<p><em>Would any experienced developers add anything to this list?\u00a0<\/em><\/p>\n<p><strong>Be sure to leave your comments below!<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Lately I have been contacted by several different BP members, wanting advice on the development costs for a parcel of land they own, or are considering buying. They want to [&hellip;]<\/p>\n","protected":false},"author":816,"featured_media":59604,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[2531],"tags":[5108,242,1007],"class_list":["post-59538","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-land","tag-costs-to-build","tag-development","tag-land"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/59538","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/816"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=59538"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/59538\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/59604"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=59538"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=59538"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=59538"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}