Commercial Property Flips

2 Replies

A property near where I live in North Atlanta, went on the market a few weeks ago. It’s listed as commercial because you would have to tear down existing home and build. I live around new construction communities, and the land that’s for sale is right under 1 acre. The lot is selling for $270K and new homes in that area are selling at $450K (4/3 @ 3K Sq ft.). I believe at least 2 homes can be built or 3 townhomes(which they’re are none in the area for sale). My question is how do I analyze this if it’s a good investment or not?

You need to find comps for similar parcels of land and building lots in that area. If homes are selling for $450k lots would generally be with $90-$100k finished to a builder.

Sellers tell brokers to list land for commercial all the time because they see dollar signs on the sales price.

That may or may not be the properties highest and best use. Lots of experience and analysis has to go into that decision and even then the highest and best use does not often match up with the current or future designated land use plan for the city or the county. if that's the case you then have to look at what WOULD the city or county approve for zoning and the site plan and figure out highest and best use with return for those parameters.    
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