Debilitated house lot value vs Empty lot value

6 Replies

Does an empty lot have more value to a potential investor vs a property with a debilitated house on it? (Seems rhetorical to ask)

Thoughts are that the debilitated house is considered a liability and the empty lot is considered an asset. If you can buy low and demo the house cost affordably, then you can relist higher for a quick profit.

How do you go about finding the empty lot value vs the current property value?

Thanks in advance!

This is difficult to say across the board but if the house is a full tear down and no way to save any of it (not even the foundation), then the value with it is less than without it since you have costs to demo and haul away. That said, you would likely not have a spread between the work of removing the house and then reselling as you did not add that much value, it is more of a zero sum game on that.

Finding the value differential is really just taking the cost of demo and adding that to the land value. Of course this is generally speaking and each lot and its value in each area of every state could vary dramatically.

Originally posted by @Meggen Morrison :

Does an empty lot have more value to a potential investor vs a property with a debilitated house on it? (Seems rhetorical to ask)

Thoughts are that the debilitated house is considered a liability and the empty lot is considered an asset. If you can buy low and demo the house cost affordably, then you can relist higher for a quick profit.

How do you go about finding the empty lot value vs the current property value?

Thanks in advance!

 Probably not, unless lots are so heavily in demand where you are that it exceeds the amount of money someone might be willing to spend for the lot plus the idea of fixing up the house. Surprisingly, most homes can be renovated, even ones that look like they should be bulldozed. If you can find the right buyer who thinks S/he can do the renovation, that usually nets you more than just a vacant piece of land. This is not to mention your costs for clearing the land and prepping it for construction, which is where I would go next if I was going to take down a total junk house - make the lot shovel-ready for the contractor; usable water & sewer taps, electrical feed, etc. 

If the front facade is salvageable, if the utilities operate, if there are curbs and gutters all those have cash value that a lot doesn't offer. Most county/city planning departments will deeply discount your permits and be more relaxed on rules if you are total rehabbing or keeping the facade. Water, sewer, electric hook ups cost money. Temporary power costs money.  VS  what is the liability of house with broken windows? Break in, fire, accident, kids party, "artists" tagging and fall through the floor thus suing you....  Those could be covered by insurance. An empty lot doesn't require as much insurance coverage...   Answer is it depends on the location, depends on how bad a shape the property is, depends on buyer's skill set to quickly have plans, specs and never change the plans along the way. 

@Meggen Morrison just want to add  that a house may cause you to retain the ability to build on a lot. If you have a lot that is unbuildable by current standards but if you retain part of the original structure you can rebuild that lot may have more value then a similar vacant lot. Obviously the rules vary by area and some of the previous commenters are much more knowledgeable then I am. I just know our local situation where this can be true.

Originally posted by @Colleen F. :

@Meggen Morrison just want to add  that a house may cause you to retain the ability to build on a lot. If you have a lot that is unbuildable by current standards but if you retain part of the original structure you can rebuild that lot may have more value then a similar vacant lot. Obviously the rules vary by area and some of the previous commenters are much more knowledgeable then I am. I just know our local situation where this can be true.

 That's a good point and one other thing I should have added is that repairing what's there will often allow you to retain a non-conforming zoning use, i.e. a rooming house in single family zoning, multifamily in a business area, etc.