Should I Subdivide Or Sell?
Hi Folks!
I am hoping someone can offer some advice. I recently inherited about 75 acres of land that I would obviously like to get the maximum value from. My surveyor suggests that I subdivide it into 3 acre homesites (more in it for him that way! lol)
If I were to go that route I would need financing to do it, build a road,etc., which would be rough considering it's raw land and what I could borrow as far as LTV.
What about selling it to a developer/investor on a Land Contract myself and putting a release clause in?
That way I could get some cash down and make a few $ on the interest.
The property is near a busy resort town in New Mexico and has about 1/4 mile of hiway frontage.
Thanks for your help! John
Though I have never done this myself I would think it goes something like this.
You need to get costs put together for everything from the surveying to putting the roads in, utilities in, etc and have that put together in a business plan with a time line. This will also include talking to the county about being able to do this.
Next you start talking to lenders to get the project "pre-Approved". Once that is there, you get a RE Broker to start advertising "pre-sales" of the lots.
You get small down and sell "below Market" to the people that get in early. You now have a bit of cash and have "proven" the viability of your project to the lenders.
You may be better off going the selling it to a developer and watching them go through the process. I would try to put in the contract that they reserve one or two of the better lots for me so that I could sell them in the future.
Thanks for the input! That whole cost thing is what is getting me. The surveyor that I am using tells me I will have to put in a "county code" road and that ain't cheap!
Then his $300-$500 a lot fee for laying the thing out,etc.
He says it can take up to 6 months to get the whole thing approved by the county and get it rolling.
I guess I need to find someone who would like to go in on this with me, I would really like to avoid shopping this deal around to banks.
You might be able to increase your property's value without putting a shovel in the ground. By that I mean securing subdivision approval.
Some suggestions: hire a local, good civil engineer who can help you determine issues like availability of public utilities, current zoning, maximum yield (# of lots). Get some estimates from the engr for different stages of work--eg, cost of laying out the property in the form of a sketch plan showing lots that conform to the zoning and subdiv ordinances; cost of full engineering and securing subdivision approvals. You should also hire a real RE attorney and get a cost estimate from the atty.
Your options, as I see it:
1. sell it now in its "raw" state to a builder or developer;
2. sell it for more with some though perhaps not all approvals in place;
3. sell it fully approved but unimproved
I wouldn't recommend your getting involved in the installation of site improvements.
Hmmm...very good ideas!
Luckily power will not be a prob as the line runs overhead right thru the middle of it. I planned on having the buyers put in their own wells, septics and all that is available is propane for gas. So basically all I would do is put in a road and stake out the lots. The road, if I had to do it to county code would be a killer, about 3/4 mile. I guess I should get real estimates on that and not go on what my surveyor told me, he said it will be more than 50K. :-(
Well anyway, ya'll have given me some options and now I need to get busy and make something happen!
Muchos Thank-You's!
Well, if things work in NM the way they do in PA, there's a lot more involved than just putting in a road. Clearing, grading, landscaping, stormwater management, erosion & sedimentation controls, etc. And with all of that frontage, the town could require some big $$$ put into things like accel/decel lane, widening, curbing, sidewalks, relocation of util poles. I wouldn't recommend your getting involved in building the site improvements, particularly if you haven't done it before.
Thanks Nancy,
That's kind of why I posted this thread, I was afraid of getting bogged down in all this kind of stuff...lol!
The land is in the county and all I would need to put in is a gravel road, but that still would be a lot of money that I would need to secure from some source be it from the land itself or a partner/investor,etc.
Nevertheless there is a lot of money to be made in this deal, I guess I will try to find someone who would like to get in on it with me.