What Do You Think Of These Numbers?
I have located some land for sale:
35 acres right outside of a city in Colorado.
$900,000 price
$450,000 first
Owner carry on the rest w/$100,000 cash back to me at closing .
What I would like to do in a nutshell:
1. Buy the land
2. Get it annexed into the city and zoned, city planner says it will only be allowed single family.
3. Get proper approval of development plans. However I do not want to start any construction.
4. Sell for 2 million and pocket 1 million.
The lots will be 7,500 sq ft and will sell for about 80,000 a piece.
Any suggestions or comments would be greatly appreciated, I have never done anything like this and have no idea how long it would take to get annexed, and sold. And I don't know if I am overpaying or if I could sell it for 2 million. Or how much it will cost to get city approval, pretty much I am clueless. So what do you think?
Thank you in advance for your input![ Edited by dkbj on Date 02/06/2004 ]
You first need to know the zoning for this particular plat. The zoning will tell you how many square feet is required by zoning for each home. For instance. Here in New York, an R1 requires 40,000 square feet per home. Since 46,000 sq/ft ='s 1 Acre, this will allow you a definate yield number, which in turn, allows you to begin to crunch the numbers.
Good Luck[ Edited by flyboy on Date 02/06/2004 ]
Not sure I understand some things. Seller will take back paper and subordinate? What's the $100K--reduction of sale price?
I think in order to determine if this deal makes sense for you, you'll need to do a couple of things. Estimate the number of lots the parcel would yield. Some portion of the 35AC will not be developable. The amount of land area deducted will depend on the property and zoning and subdivision requirements. You'll need some ballpark idea of the cost for streets, curbing, utilities and other improvements to the site. You should also determine what the new homes would sell for on the lots and confirm the projected sale value if the lots are sold vacant.
Any offer you submit should have contingencies, including one for an up-front feasibility period (at least 90 days) during which you/your engineer can have work such as survey, wetlands, floodplain, environmental, topo, etc. done. Before the end of this period, you should be able to evaluate the data collected, put the seller's price in perspective, and decide if you want to move forward with the deal or kick out.
In PA, the municipal approval process can easily take 18-24 months. Local real estate attorneys and civil engineers can fill you in on the time it "should" take.
I did a project like this last year in Georgia. The timing went as follows:
3/2002 entered contract
7/2002 closed contract
7/2002 applied for zoning change
8/2002 zoning workshop
9/2002 planning hearing (tabled)
10/2002 planning hearing (passed - 280 homesites
11/2002 commisioners hearing (tabled 2 months)
1/2003 commisioners hearing (passed - 225)
8/2003 closed sale
Note that the Commisioners cut me 55 homesites, I had the property sold at $6200 a homesite, ouch! You can't trust poloticians. I still made good money and would do the project again.
Good luck!