How to put value on extra land that comes with a house?
Foreword: My local market is Santa Fe, New Mexico and the center of the city near plaza is very congested to provide space for new constructions. The value of houses and rentals is through the roof because of that. I have recently came across a neighborhood that has potential for gentrification due to its proximity to the plaza and hipster businesses. I make this statement as there are new renovations going on there right now with whole houses being torn down and rebuilt.
Deal or no Deal: Very few houses are being sold or rented in this neighborhood. When house for sale came on the market in that area, my realtor called me. An advantage of this house that it has a large plot of land that could be split in two. The disadvantage is that it an utility pole on its side with electrical wires crossing the plot. I was told that utility company might have rights to do that but I do not know how to check it or make them to move the wires.
I am being sold on this deal because of appreciation and an opportunity to sell an empty half of the plot in the future. I do not know how to put a dollar value to this land. They also tell me that I can build another house there.
I am not being sold because I look for positive cash flow. The main house (400k) has two units - main+guest. The extra land has an artist studio built on it for extra income 2700 total price that might be pushed to 3000. Combined rent covers the mortgage, aka FHA, but does not provide extra income to pay for maintenance and capex, which I can afford to pay if need be.
Conclusion: I feel like passing on the deal but decided to check with more experienced people here.
Can seller financing in some form make this deal pass your muster?
I have no background in construction and look for passive income so if I could sell that land to lower the price of the house then it might meet my criteria.