I need some direction from members. I am in the process of subdividing an existing 9+ acre property into 4 individual lots:
- Lot 1: primary residence - includes an existing 3,000 sq ft, custom home built in 2006. Zillow estimated value is $767K and will sit on 2.9 acres
- Lot 2, 3, & 4: Comprise of 2 acres each.
- All lots will include water, cable, electricity and ocean views.
My dilemma is whether or not to build a spec home on the vacant lots and sell them for a higher end value? A 2-acre lot with all utilities, ocean views has an estimated market value of between $200K-$275K. New construction per sq ft costs are running on average $125-$150/sq ft.
What would you do and why?
Thanks for your help.
Are these in Hawaii? If so, where?
Hilo, Hawaii - big island
Unless you are experienced, probably just sell the lots.
Is it on the hamakua coast? Or in Hilo town?
Spec. You can drastically increase your margin by selling a finished product. You will have to manage the construction budget with a microscope but there is a larger upside potential. I don't know if this applies on the Big Island but on Maui new homes sell much faster than vacant land.
@John Kai I would suggest you build one spec that you can use to market the potential for the other three lots. If you sell the spec home, then consider another. Its much harder to sell vacant land but, with one spec, you help the buyers envision what is possible. Especially for an ocean view!
@Ivory Quintal located in upper Kaumana - Akolea Road
@Patrick Franta good point about selling a finished product. That's why land developers always make a deal with a builder to put up the first home in a development to get the ball rolling. @Mark Waite similar thoughts about doing one and moving on to another one.
I own the lot and the rezoning and subdivision is a way to get more value out of the property. I don't have any costs related to the land acquisition, just for the construction of the home.
Advertise the property for sale , have a contractor lined up , advertise "home to be built , your plans or ours . Get the contract signed , make the buyer pony up a large sum and have an good contract . Dont allow a cheap or small house . It will effect the other lots .
Thanks @Matthew Paul
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@Account Closed , I hear you. I've built two homes from the ground up and have that experience as an owner builder. I'm thinking of having a couple of contractors bid on the jobs as if they will be building all three homes. My plan is to get a discounted bid due to the proximity of the jobs and the work will keep his crew busy for the next 10-12 months. I'll be seeking private financing to do this deal.
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