Raw land for multifamily. How much should I pay?

Question

How to calculate the price you can pay for raw vs developed land. I am trying to do feasibility analysis on a 8 acre multifamily raw land I got under contract in Lexington NC. 2 blocks from i-85 business and 1.5 mile s from downtown. Its in the neighborhood with mostly rentals and single families are sold for around $100-120/sqft. Creek running thru it wasting some land, 5 acres to remain to develop and build. Need a culvert over the creek to access the whole land. Wondering if I should develop or wholesale.

Adam Lacey · Answer

@Uday Kumar you can check this site to determine if it's in a floodplain. https://msc.fema.gov/portal/ho...

Account Closed · Answer

In order to make an informed decision, you need to establish the "developed value" and compare it to the "As Is" value. The developed value could take the form of paper OR finished lots. To get to either paper or finished lots, the property needs to be fully entitled. Once and if you have a "shovel ready" project approved, you need to decide if the profit is with worth the risk of improving and selling the finished lots. In order to do any of this, you need to understand the generic process and how it is applied to the subject property by the planning & zoning department you need to work with to get your project defined and approved. All of this takes knowledge and money and needs to be articulated in words and numbers and fully understood before you move forward with your development plan.

Adam Lacey · Answer

@Uday Kumar make sure you know whether that creek is a FEMA regulated floodplain. If it is, take a close look at the limits and discuss options with a qualified engineer. Not a huge deal, but could easily add $45k to your project if you need a CLOMR/LOMR.

Teach out if you have any questions.

Anthony S. · Answer

Pay for local, knowledgeable engineering firm to give you an opinion. It will be the best money you spend to understand costs, schedule, environmental issues, and entitlement regulation specific to that parcel.  Only then will you know what's best action for you to take.

Good luck!

Barry Ruby · Answer

@Uday Kumar Uday feel free to send me what you have and I’ll be happy to give you my opinion as to what I see

Uday Kumar · Answer

@Anthony S. @Adam Lacey Thank you guys. Hiring an Engineer sounds like the best next step. I will look into the CLOMR/LOMR.

Uday Kumar · Answer

Thank you for the valuable information Barry. Planning Dept is willing to help and gave some info. I guess Im trying to figure out the approximate developed value, even if it is a range. I am not planning to spend money on survey, engineer map, ESA etc. just in case it turns out to be a bad deal. Maybe I should start with showing it to a developer for feedback.

Raw land for multifamily. How much should I pay?

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