A collection of properties has popped up for sale that includes 5 of 10 total parcels on a single street. The street is entirely multi-family, duplex to triplex properties.
The 5 parcels include two side-by-side oversized parcels that can each be split in half to create a new "normal" parcel for a net 11 parcels on the street.
This new parcel has enough space to construct a new duplex with parking/back yard/etc.
With the sale of the original 5 of 10 parcels plus the creation of the 11th, if purchased this would give me control of 6/11 parcels on this street. Enough for a majority.
My question is if control of a street is worth anything and would you pay extra for either control of said street or how much would you value vacant land ready for construction in considering how much to pay for a portfolio of property.
The numbers are OK without the 11th parcel but not spectacular. It could generate $100/door at list price but I am unclear on how to evaluate future potential on undeveloped land and if there are benefits to controlling an entire street via owning the majority of land.
Thoughts most appreciated!
My experience is that raw land is, or can be, difficult to deal with. In Pennsylvania, there are sewer/water tapping fees, which can be expensive. Many of the local banks require significant money down if/when someone wants to purchase raw land, 65-70% if there are no plans to immediately build a house. Lastly, if you do decide to build, right now it's generally cheaper to buy used than build new. Locally, our Habitat for Humanity builds for about $80/sf using donated materials and time. That cost excludes the cost of the land.
Liam Goble, HBS Real Estate, LLC | 814.876.5034 | http://harebraininvestments.com
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