What’s your first step when evaluating a lot like this?

Question

When you first look at a lot, what’s the FIRST thing you check before deciding whether to spend more time on it? Utilities? Topography? Zoning? Layout?

I’m curious because I’ve been marketing this Atlanta lot and getting very mixed feedback depending on the investor.

Link here if anyone wants context:https://www.biggerpockets.com/real-estate-listings/malb-vacant-lot-opportunity

Samuel Awosolu · Answer

Hey Brooke,

I think most investors looking to build or develop will look past the location and go straight to the feasibility of the lot. More than likely they are familiar with the area. So the more info you can provide about the lot upfront, the faster you can attract the right buyer.

All the things you mentioned above are what they are looking to see in your marketing: Utilities: (distance to sewer/water, tap fees, power availability), Topo and grading: (slope, retaining walls, drainage), setbacks, zoning and allowable use, recent new build comps if any, and highest and best use of the lot.

When those items are unclear, you’ll naturally get mixed feedback because different investors have different risk tolerances. It will also filter out investors that may not want to take on this kind of project or those that are tire kickers.

I believe the more granular you can get with the info you include in your marketing, the easier it becomes to match the lot with the investor it truly fits. Hope that helps!

Brooke Adams · Answer

I like the point about investors basically filtering on feasibility first since most are already familiar with the area anyway. And yeah, the mixed feedback probably comes from that gap in upfront detail, different people filling in the blanks differently depending on their risk tolerance. I also agree on being more granular in the marketing. The clearer the picture is upfront, the easier it is for the right buyer to self-select in without wasting anyone’s time.

If you were marketing a lot like this, what’s the one piece of info you’d never leave out upfront?

Greg Kurzner · Answer

I reverse engineer it (in my office) from estimated exit home price based on immediate market area, type of construction (size and design of the house) and figure out if the market will bear the cost of the necessary construction, after including profit and lot purchase and development cost.

Then, and only then, if it pencils, I might walk it.  That is where most go to die.  Generally if a lot is not built on, there is a reason and that reason makes the lot fail.  Creeks, grade, lack of utilities, etc.  Happy to talk off line if you want.

Brooke Adams · Answer

That’s a really solid way to underwrite it. Starting from the exit price first keeps everything tied to what the market can actually support. Once you layer in construction, development costs, and profit, a lot of deals probably drop off pretty quickly.

I also agree on the reality of vacant lots, especially in infill areas like Atlanta, there’s usually something going on under the surface that affects buildability. Appreciate you sharing your approach.