When it comes down to the selling and the buying of lots for houses, what am I looking for to analyze a price to offer. The situation is a seller has a 2 houses and 5 lots for sell. The houses are close to tear down, but wasn't sure what should be offered on lots. Never dealt with this before so any help would be great! Thanks!
Make your offer to buy the houses and include the lots at no extra cost to you. Then sell the houses (wholesale) and keep the lots free & clear. They make great money stretchers or can help with a 1031. I've done this deal before.
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As someone who buys and sells lots full time, I would say it all depends on your level of experience and what you feel comfortable with. Do you even want the houses? What is the current value of them compared to its ARV? Is it worth? Maybe its better for you to just grab the lots and do a straight sale and/or wholesale them out.
Also, when determining the value of a tear down for land value. You must factor in what its gonna cost to actually tear down the house and clear it away, that should be included in your offer to the seller.
Thanks @Aaron Mazzrillo , we decided to go that route with it! just waiting to hear back from sellers!
@Adrian G. Thanks, that's very helpful. I think we were leaving out factoring in tear down cost. After really taking a closer look they could both be rehabbed (both 1000 sq ft 3/1s). We low-balled the seller who said he would sell all the above for potentially less than 15k and offered 6k because houses were essentially 15k-20k rehabs with 50k ARVs. These will be rental units once fixed.
Ahh ok, very cool. Let us know how the deals go.
Lots aren't worth anything unless you can develop them (turn them into something that will generate income) or sell them (in which case you'll likely sell them to someone else who will develop it).
In either case, you need to know what the highest and best use of the land is (what the most profitable thing to develop), how much it will cost to develop, and the income it will generate. From there, you can work backwards to determine the value of the lots.
I am looking for a (cheap) lot in San Francisco Bay area, I would like to develop it, but I cannot find usable land anywhere...
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