Found An Empty Lot FSBO- Now What
While driving home I discovered several acres of property being offered by companies ranging in size from 74(+-) acres and a large parcel of 114 acres, obviously you would need cash up front to even approach these companies. But I found a lot in a residential area of new homes being built. This Lot was offered FSBO. Since I have no experience as a developer and I am still searching my area for a mentor to help me in exchange for a profit split, how can I make a profit buying this land, and what would be the process to flip this land, are these types of contracts assignable like wholesaling homes or would I have to actually close with the original seller?
Nancy I know you are familiar with Land brokering, flipping ,and developing so I await your wisdom : >
wmwealth,
I have some questions for you. Do you want to assign to a builder? What would a new home on the lot sell for? What is the FSBO asking price? Public or on-side utilities? Is the FSBO an individual owner or is it the builder of the subdivision?
Nancy
Hey Nancy I knew you would respond for me.
The lot is adjacent to another home, the sign said FSBO and listed only a phone #. Homes in the area vary as they are all different in size and amenities( screen porch, no porch, big 3 br/2ba, small3 br/2ba). I will run comps on like props to get a better idea but $150,000-$180,000 should be a safe bet. I'm not sure about the utility question( did you mean on site?)
As for assigning to a builder, I do not know the process but since I have no development experience I am assuming this is my only way to make a profit, so yes I would likely assign to a local builder.
I hope I was clear on the details, I have not investigated too much since I did not have an exit strategy. But if more info is needed to advise me then I will get more.
Thank you again Nancy
Yes, I did mean on-site utilities. Well, in my area, builders price lots by working back from the price that the house on its lot would sell for. So, if the "total package" would sell for $165K,
165K x 25% = $41K (less) per lot horizontal improvement costs= value of lot
The lot improvement costs should be minimal since I assume there's an existing street in place. However, if it's on-site water and sewer, you'd have to deduct that cost from the $41K. If you want to assign to a builder, there has to be a spread between the price the seller wants and the "flip price" to the builder. Otherwise, there's nothing in the deal for you. So, in other words, the price the seller wants has to be less than $41K.
Thanks Nancy, I wil keep that in mind when looking for future lots. Very helpful.