I have a pretty solid lead on a deal in a popular area of East Lake Atlanta, GA.
This would serve best as a mew construction.
The lot size is almost 2 acres. The largest in the area.
Highest comp on next street, which isn't as good as this street, is mid 600's (3300sf). Everything else is mid 500's (2800sf) and below.
The questions are:
1.How much should the actual land be taken into consideration in regards to what to build? Its about 3x the size of the other lots.
2. As an experienced builder of new construction projects, would you attempt to beat the highest recent sale price of mid 600's? If so, by how much?
3. How do you decide on what to do with so much land? Only on house can be built on it.
I have no experience with new construction, so excuse my ignorance. Please help
Typically I try not to push an areas prices. I'd have to really look at that specific area but with my new construction I like to be either at the bottom or middle of comps. For example I just sold a beach house and all the comps were in the mid to high $400k range. I priced my house at $429k, and its sold before completion for full asking. The other guys will be owning them until spring, I'm on to the next deal. This also is a hedge against a market turn down, if the market tanked those guys at say $525k trying to push things would be down in my $430k range.
Pushing prices can be done in hot markets but its also a wonderful way to overbuild and lose your shirt if the market turns.
Land value is again tricky, a lot of it depends on what needs to be done to get the land build able. If its raw land costs can be high, so you need to really look into what it will take to get a house on that property.
If everything is mid $500k's I'd shoot for $550k for arguments sake, consider anything higher than that a bonus. For a house at that price point I'd be looking to be in a lot for around $150kish for a finished piece of property. Maybe a bit more if I really knew the area and I new I could sell it fast, but certainly not more than $200k.
Remember that's finished if you have to spend $100k to get it build able take that off the top.
Is enough room to subdivide into two lots and build two homes, therefore you may be able to get more bang for your buck and not have to push the prices in the neighborhood.
@Chris Field Thanks for your insight. Hedging against the market is the most important piece of information I took from your response. Thanks again
@Cortney Newmans Unfortunately the lot wouldn't make sense to subdivide based on its location.