Lot in Raleigh. What would you do?

11 Replies

Hi,

My parents own an acre lot, vacant, in Wake County. All neighbors have various sizes and ages of houses. There's not much conformity.

Knowing the final decision is theirs, at the very least I'd like them to make an informed decision. They don't have to sell, yet I'm fairly sure they don't want to deal with building and renting (which is what I'd like to see, but it's not up to me).

So to show them educated options, I'm curious to what you would do with this land?

Thanks for your time to read.

Depending where in wake county that could be expensive land. I personally would sell it to a developer and move on. Unless they want to build a house to live in.

Building a rental never made much sense to me but I suppose some people do it

@Kevin Foster what would be the comp for the type of house they will build? 

What is the cost per sq ft to finish? 

I think they should weight out both options. 

  1. Build and sell. 
  2. Sell lot

See what the total return is on both and weigh out what your time is worth on building and selling. 

@Kevin Foster

A lot of what can be done with the lot depends on the zoning and availability of city services and utilities. That should help you in determining highest & best use. 

At the end of the day, if you are looking to build to rent or build to sell, you need to find out the zoning (commercial? industrial? single families only? How many? Apartments allowed? How many stories?, etc.), is the lot infill, do you need to re-zone, are water/sewer available (if not, get a soil scientist to test the soils), impact/tap fees, etc. 

Once you know what you can and want to build, start interviewing architects/draftsmen, builders, etc. Walk their past projects. Ideally, they should be able to steer you in building and designing to your aesthetic and can advise on how to save on construction costs.

Nail down funding. Spec loans are hard to come by. However, owning the lot outright usually is good enough equity. However, it is nearly impossible to get a spec loan with no prior experience. You might want to then partner up with the builder. If building as a home-owner, different story.

Sorry not able to get into too much detail here. I would advise you first to talk to Planning. 

Best of luck!

@Kevin Foster the Triangle is on fire right now, if you are in the right location. Homes are being torn down left and right, and if these same homes were located in any other area, would be perfect starter homes.
I’d advise your parents to check their neighborhood for recent transactions and see if there is any building activity going on. You can check building permits with wake county to get a better idea.
If the lot is outside of the city limits, there might not be as much competition because there are planned developments going up all over, so unless the lot offers some unique amenity, it would be a hard sell for someone looking to build.

Quick note. Thank you to all those taking time to reply! Sorry for not responding sooner. I'm not getting notices by email or on my app. Maybe it's on me. Will check. I seriously thought I had an awful post.

Since, I've done more research here on BP and elsewhere. I'll update what I've found and reply to you awesome people.

Originally posted by @Caleb Heimsoth :

Building a rental never made much sense to me but I suppose some people do it

Thanks @Caleb Heimsoth ... I'm finding a lot of similar advice about building ROI ... bad timing right now.

Originally posted by @Scott Hollister :

@Kevin Foster what would be the comp for the type of house they will build? 

What is the cost per sq ft to finish? 

I think they should weight out both options. 

  1. Build and sell. 
  2. Sell lot

See what the total return is on both and weigh out what your time is worth on building and selling. 

This! Huge thanks @scott hollister for the short and sweet first step. That's what I'm doing now. I found advice about building modular for the cost effectiveness. Some neighbors are modular, so that may work. Ultimately, what's better math. Thanks man.

Originally posted by @Betty T. :

@Kevin Foster

Sorry not able to get into too much detail here. I would advise you first to talk to Planning. 

@Betty T, no apology necessary. This was amazingly detailed. That's also why my parents wouldn't do it. If building a place were to happen, I'd have to do these things. I'm game.

Funding would be okay. They'd qualify. Yet they're very old fashioned and risk averse, so I'd have to present this well. Thanks Betty.

Originally posted by @David Mohrmann :

Kevin Foster the Triangle is on fire right now, if you are in the right location. Homes are being torn down left and right, and if these same homes were located in any other area, would be perfect starter homes.
I’d advise your parents to check their neighborhood for recent transactions and see if there is any building activity going on. You can check building permits with wake county to get a better idea.
If the lot is outside of the city limits, there might not be as much competition because there are planned developments going up all over, so unless the lot offers some unique amenity, it would be a hard sell for someone looking to build.

 @David Mohrmann I appreciate you so much right now. I've researched the general area and think it's a good long game opportunity. It's a bit of work figuring this out. I'm using my old real estate agent skills, but this investing side is all new. Wish I learned about it when trying to be an agent! My data/stats/analytical/math brain is more suited for investing. It's way more fun.

For anyone relating to this situation or curious, here are posts I read that helped.

I still have to check zoning, but I found one comment really stood out ...

Originally posted by @Clifford Kearns:

I am a general class A Contractor in Virginia. The best and cheapest way to do a duplex is buy a modular unit you should be able to put that together for about $75 to $80 per square foot. The time line is the best because you can get the construction done and ready to rent in 45 to 65 days!

And that sent me down a modular research rabbit hole. It would best conform with the neighbors.

@Kevin Foster

Happy to help!

Might be beneficial to talk to some lenders in the area while you do your research. If you build on spec, they want to see prior experience - that's key in getting those spec loans from the few that offer them, as well as being properly capitalized. Presale would be easier to fund, as well as build to rent. 

Keep us posted and best of luck!

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