Architect Blueprints Commercial Property, does it raise values?

Question

Considering a 10+ unit residential commercial property if one already owns the land, has everything else in order: civil engineering, soil survey, Phase I, and architectural blueprints...if the owner was forced to sell due to lack of financing and or some other reason does having those things necessarily increase the value of the vacant land? Would the owner possibly get their money back during the sale? I would love answers based on a possible personal experiences. This is a class A piece of land in a major metropolis. To be clear this means say architect and engineering alone would be $110k, so if the land was purchased for $300k that with plans and basically everything ready to go the land could sell for $410k...? Thanks

Nik Moushon · Answer

Yes, you can sell the land at a premium if you have all those things in order. The key though is to have the permit ready to be issued. That means going through the entire city review process and have everything approved. Shovel ready, as they call it. What you are selling is "time saved" and the extra up front capital that isnt needed.

If they are not permit ready then you can still sell at a premium but not much. Its not very enticing to buy something that you didnt get input on design and layout to have to sit through 12-24 months of city review.

Timothy Munger · Answer

Well the variance took two years to approve. I do not expect to have much issues with permits get approved if I use qualified contractors to handle the prints and civil etc

Nik Moushon · Answer

Having the approve variance is important buts its a far cry from having the permit set approved. They are very different processes and take vastly different amounts of time for approval. If you don't know how to list, promote or sell a property then you should find a REA that specializes in development sales. You will have to do your research on which local REA is your best option.

Timothy Munger · Answer

Included in the above response...and more importantly would a commercial appraiser consider the costs of or the fact that it is shovel ready and entitlements are finished? Thanks

Timothy Munger · Answer

Thank you sir! It already has a variance to build what I have so it should not be difficult at all to get permits. All I need to shell out for is civil engineering and the blueprints I've done everything else, but that is 100k price that is risky to put down if one might not get it back. Where would you list something like this for sale though if needed? How would you get someone's attention say on loopnet when there are thousands of lots for sale but not many actual built multifamily which are all very overpriced.