Replacing A House With Condos
This is new territory for me. I usually buy and rent or flip. I have come across a property in a hot building area. Close to NYC. The property is about .75 acres. I am interested in putting a team together to buy the property and put condos on the land. In this area builders are putting 2 family houses on postage size lots. I would like to sieze this opportunity but not sure what my first step would be. Is there anyone who can give guidance of like the first five things to do.
In general, I try to keep the cost for the land purchases around 15% of retail.
For example, right now I am building two houses on lots that cost me $41,250 each. Comps for the size houses I am building indicate that I will sell one house for $290K (non conforming lot restricted the size) and the other for $315K. That is below 15%.
However, the tap fees were $14K per lot and it was 6K per lot to clear and grade them. The total land prep cost was around 20% of the sale prices. I could have probably paid as much as 50K for the land and still come out making 80-100K.
If you are your own general contractor, you can probably push the percentage up to 30% and still come out with enough profit to make it worth your time and investment.