Dissen Heights Houston

3 Replies

Does anyone know how to determine lot value when there are no comps in a very hot area?  House is a teardown.

If the house is a tear down then really a lot of what you can do is calculate what it would cost to build on the property and what the retail price would be at the end of the day when you go to sell it. If your building cost is $100/sf (for easy math) and you are building a 2500sf house then your building cost is going to be $250k. Then compare that to what you would be able to sell the house for. If you can sell the new house for $350k then you would need to be buying the lot within the realm of where you will still be making money. 

Obviously this is a very condensed analysis, but really the lot value if the the house is a tear down is based off of the new build and the price point you need to be at to make money. 

If you would like to send me a direct message with the address I would be more than happy to tell you the price range I would think you would need to purchase the price. I work the Houston market, but not doing scrape and builds down there. 

If your goal is to build a new home and sell, then it really comes down to what you think the final sale price is, and then you work back from there to get the profit you want. 

Basically, you would calculate how much you can pay for the land by estimating the numbers below:

Final sale price - Build cost - demo cost - permits - holding costs - desired profit = “Lot value”

Now that would be the Lot Value to you. Someone else’s lot value might be higher or lower, depending on what they plan to do with the land. For example, a developer who is going to build 4 townhomes on that same lot can probably pay more for it and still make a profit.

Figure out how much you can spend and offer that much. You can use your estimates to justify the offer price. If they take it, great. If not then it’s not a good investment for your chosen strategy

Thanks for the information

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