I'm currently analyzing a vacant lot in a highly developed city near NYC. The potential deal was brought to my attention by a couple of investors who like myself have zero experience with this.
The lot is 25x100 and we received a quote from a builder at $85/sq ft. The plans for the building have already been approved by the city. The current owner has decided not to go forward with the build and is looking to unload it and focus on some other areas he's developing in the same city.
What are other things I should be considering other than comps and making sure I get the lot at the right price? Also any tried and true metrics for determining a good deal with vacant lots would be very useful.
I know nothing about your area. The lots are very small compared what we work with. Our buildable lot sizes vary from 3,500-7,000 SF.
The build cost seems very reasonable which is really the builders cost + his profit.
I normally back into the lot cost. I would start with comps for similar houses. I would then subtract out the build cost. What is left is your desired profit and the total cost of the land including cost of making it buildable. Unless city fees are paid and utilities are stubbed in the value of a lot is very little.
I hope this info can be of some help.
If it is in NJ, make sure that you are CERTAIN it is approved. That phrase is tossed around lightly, even by "professionals".
Get proper discovery for oil tanks and such. Post building phase appraisals, tax increase.
Beyond that, at the right price - it can be a great opportunity. Especially in North NJ, Hoboken or similar. Hope you do well on this one!
Planning single family or multi?
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