@Sarah Lorenz
Great question. My answer is.....let me give you the methodology for determining the cost.
Two reasons for doing it this way:
1. The general specifications for site development in CA vs. MI, and your local city/county are way different then anywhere/everywhere else. Different due to regional differences in the engineering specs for the utilities (i.e. one type of pipe spec for sewer in CA, another in MI), the road design, do they require you to build curb and gutter or do rolled curb, landscaping and parkway specs, etc. So I could tell you it's 50k per lot for land development and that's a good number here is CA, and a bad number in MI.
2. Your site may have different characteristics than mine. You may have hills, I have a flat site. Yours has trees, mine doesn't. Yours has nesting owls, mine has Bluespotted butterflys. Yours has no blue line stream, mine does. On and on and on. Each situation will drive a different cost structure.
My methodology is to have a set of practices that takes these differences into account, a fundamental way of looking at a site development or building project and making a thorough and rigorous assessment, even when you don't know what's different. Think of it this way, the site on the east side of your city can and will be totally different from a site on the west side. Same city/county, same market, radically different cost structures.
I want to get everyone thinking about how to fundamentally approach gathering costs for a specific task or project: such as how much for site development costs, how much to build each house, or the development impact fees required to be paid. Fundamental practice, an action of underwriting and gathering info on deal, a flexible, open and dynamic approach to the details in that particular deal. Fundamental system, flexible approach to details.
So I always approach it from a flexible perspective, meaning I don't assume a cost in one area is a cost in another area, they are probably different. But fundamentally I know these costs for land development always exist, in all markets at all times:
Land
Underground utilities, wet and dry
Mass grading
Roads, sidewalks, curb and gutter, signage
Drainage, i.e. the building of detention/retention basin, spillways, and/or underground drainage structures (usually under the street).
Development impact fees related to land (does not include the fees that you'll pay to build each house
Fees:
- Park fees
- Traffic fees
- Drainage basin/district fees
- Water basin/district fees
- ANY AND ALL OTHER FEES THAT EXIST (see below, ask and ask and ask) WHATEVER THEY MAY BE
Soft costs
Design and engineering costs
- Plan check fees for your final plat map and engineering plans
- Planning application fees if processing a zone change or general plan amendment
- Environmental studies, investigate endangered animals and plans
- Phase I, II, and III environmental studies, i.e. toxic and environmentally impact soils conditions
The most important thing to remember, is that this is and must be a flexible list, not fixed and objective. Always be looking for what's not on the list, what's left out, what's missing. That's usually where people get in trouble, the costs that were forgot/missed/didn't know about.
So you create a spreadsheet for your own internal use, and then call the folks who know these costs cold and begin you information and cost gathering.
Using this checklist system, I could go into MI and do a relatively complete underwriting knowing nothing of the local requirement or costs structures. I would call land brokerages firms, civil engineering firms, the local city/county for fees, construction companies for utilities, road, sidewalks, grading, etc. In many markets, there are companies that specialize in the preparation of feasibility studies for land development costs. In some cases, land brokers may have this info from past deals that they worked on, but be careful. The data may be old, the broker may be BS'ing you (nothing like a low land development budget to make the high price for the land purchase look reasonable). Always, and I mean ALWAYS do your own independent analysis. I promise you it will save your butt.
One tactic I use is to always ask everyone you talk to: What am I missing? Is there anything I did NOT ask you about, a fee, a cost, a unique issues (soils type, water table, endangered birds/bees/bugs/lizards/owls, etc).
This is not perfect solution, but the main issue folks run into is they don't ask enough people broadly, and then question these people enough deeply.
Grind.....it......out.
Ask a million questions, ask everyone, everywhere, all the time. If your driving people crazy with your questions, your on the right track but just getting started.
Scott
