Land Lot Development - How much to pay?

[Jeremy Dyer]

I recently came across some Raw Land in Forsyth Area roughly a little more than 5 acres. I am not sure how to calculate if its a deal and how much of I should be paying. The newly constructed homes in the area are selling for around 185k at about 2000 sq ft on 5-6k sqft lots. Any feedback is greatly appreciated.

How many houses could you build per acre?

Approx cost per house to be built (if around 2k sqft)?

How much should I pay per acre?

What kind of development costs should I factor in?

[Will Barnard]

Due diligence is key here, not only on the property itself but the local market too.

As to the property, you will want a phase 1 environmental report as well as a highest and best use report. You will need to speak with zoning, building and safety, the fire department, and possibly other government agencies. How many lots you can subdivide this particular parcel into will depend on your findings from these agencies.

As to rice, you need to work backwards. Once you know how many houses you can build, then you can figure construction costs, permits, infrastructure, due diligence costs, etc. Then your profit margin and whatever is left is what you can pay for the dirt.