Wanted to take some advice from you experts. I have residential lot available at a good price (40k) in prime neighbourhood (homes in that neighbourhood go at around 600-800k). However the lot is not even and has lot of trees (approx 1.25 Acres).
Is it worth investing? The options i am thinking is to
1) Option 1: Develop the lot (clear the trees, stumps and level the land) and put it back on the market--not sure how much this will cost..but looks like 3-5k to clear the land. Levelling still checking.
2) Option 2 is to hire a builder and build a home. I am totally new to this process so thinking this may not be a good option but if I can find a good builder and a good price $50-$60/sq ft for consturction may be worth a try.
Thanks again everyone,
The average share of the home’s sales price which goes to finished lot cost is about 20% in this area, so it seems like you have a lot of room there for a new construction. You may be way off though, on build costs. For a high end home I can't see you getting anywhere near your figure. I'm thinking about 30% more. That still gives you room, though. Figure about 60% to construction, 10% for marketing, carrying costs and general overhead, and depending on the square footage, you can still look at 10% (or more, with the low lot cost)profit of a nice sales price. If you're an infill lot intown, that's a quick sale. Seem like the construction loan would be the hardest part of this!
It all depends on the numbers & location. I have a similar situation in Brookhaven area that I am figuring out the options. Option 1 is best if you are not a savvy investor going thru the pains of building and selling retail.
If you are building a house you need to time the market for maximum buyer season and price. Also you need to define upfront if this is a move up buyer home. 600k to 800k is not a starter home. Buyers in that range expect lots of bells and whistles in GA.
Your cost to take down trees and clear the land seems low. It depends on the topography of the land.
There is so much that goes into this than you can imagine. A fellow BP member on here I have met before Blake Shaw builds custom homes in Atlanta. That might be someone you might want to take to lunch to get the realities of what you are trying to do.
Hi Matt & Joel: thanks for providing your inputs. The breakup is very informative. Yes this is a high end neighborhood and the HOA has architectural controls in place. The original builder who bought it has run in to issues and wants to offload it. That said went and inspected the site. I see the land is uneven and a small stream running through it. Would require a lot to time and effort to level the land and clear the trees out. Like Joel said my initial approximation of costs were low.
Appreciate your inputs.
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