I just had an offer accepted on a SFH in Charlotte. What I liked about this property aside from the deal economics of the existing home, is there is a very large lot and there is enough room to build another home on the lot and it would fit very naturally with the other houses / neighborhoods. I am just slowly evaluating what and when I might want to take advantage of that since I essentially have a zero cost plot of land for it.
The neighborhood values are around $120,000 - $135,000 and my team believes that build costs to put a comparable home (3/2 1200-1400 square feet) on lets say a .25 lot would be around $55 a foot. For anyone with experience in Charlotte, does that seem reasonable?
I am an infill developer in Charlotte. I love urban infill! If you have never subdivided before there is a lot to consider zoning, utility taps and easements. Do you know if a house was previously on the lot?
I'm not a builder, but that $55 per sf seems very low. Is that including the lot? Either way, it seems like that is pretty low unless these are extremely basic homes. I'd love to hear more details.
Never happen paying people to build it. Not possible. $75-80 with sale fees and construction loan interest.
Much appreciated for all your comments.
Ok so the zoning is residential - lot is between two existing houses. Easement is no question since there is adequate road frontage. Utility taps are always the same - probably $6,500 for water & sewer.
I wouldn't need construction loan. I have a strong relationship with a regional bank that provides me lines of credit as well as flexible loans where my interest is generally prime +1% or prime +2% depending how I structure it. Probably just access a line for it. In terms of sales fee, great point. I would use my agent /broker that does all my business today (buy and sell) so we have an agreement on reduced sales fees whenever I am selling anything so that helps to lighten the costs a bit - but I need to redo all the costs and confirm what is included in that estimate - thanks for that.
I would probably build this as an additional rental for my portfolio and as a rental you definitely would have build requirements / finishes that would be different and less expensive than if you were finishing it for flip / resale. If I did want to resell it - the neighborhood is a solid neighborhood but it doesnt have elaborate build, features, or finishes so I would just try to match what is out there. My team has some good relationships with a few builders and they seemed to think for that neighborhood that was a good estimate, but I agree whenever you develop you need to be prepared to deal with surprises, unseen issues, and cost overuns. Definitely need to run the numbers at $75-$80 and see if the project would make sense at that (although that does seem pretty high for lots of areas in Charlotte). I am not in a rush on this, so I think I need to do a lot more extensive analysis and research and then report back.
one other question is the land actually multiple lots or one lot. Some cities have strict rules about lot splits. I tried to give the back part of a lot to a church, useless land to me , but the city said that it would reduce the size of the lot enough that would make it less than the required size for the area zoning and they nixed the deal.
@Eric Baum You will need to go to the Planning Department and find out what the minimum lot size is in the neighborhood, what would be required to split, setbacks required for curb, gutter, sidewalk, landscaping, etc. If the zoning and lot size allow you to do a split, you can go talk to a civil engineer and ask what it would cost, etc. Good luck.
Easements I was referring to were for utilities. But it sounds like you have it all squared away.
Believe it or not it is possible to build basic at this price. Track builders do it all the time. I am guesing the house will be on a slab with small footprint, vinyl sided,no garage, builder grade everything. If the lot is cheap or free than it can be done. I have never tried it but I have seen examples.
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