Land Development and Urban Market Updates

This is turning out to be a busy week.

Rural Land Development Corporation

We have found several towns where serviced residential land can be purchased for $0.80 per square foot or less, and built up homes are selling for $230 per square foot. What the development in these towns would typically entail would be the purchase of a large lot, subdivision, and then building of 4-plex style homes in the lots.

An example would be the purchase of a 3.0 acre site for $90,000. Services for this site are located at the property line. Subdivision of the property into 10,000 square foot sites (each approximately 80X120) yielding 10-12 sites depending on the community. Next the construction of 4plex style units each measuring 900 square feet above ground. Each 4,000 square foot 4plex should cost (with utility hookups) in the vicinity of $400,000.

Next we can either condominiumize the units or keep them for rental income. Mind you, in most communities rentals would not exceed $600 per unit per month so $2,400 per month to cover a $410,000 cost before profit is a hard pill to swallow. Assuming we go the condo route, town homes may be a better land use, but running the numbers at 12 units per development leads to costs of:

Land Cost: $ 90,000
Subdivision/ Legal: $ 30,000
Construction: $ 1,200,000
Realtor Fees: $ 80,000
Total (Before profit): $1,400,000

Yielding a selling price of $116,600 per unit without profit. We would potentially end up selling them around $139,900 each, having our own in house financing for zero down deals (HELOC style break-even around $800 per month), and potentially keeping one or two for cashflow or capital gains purposes.

All this would potentially cost $400,000 and would return $275,000. Now if we can find a way to decrease the construction cost by $10 per square foot, that would leave another $120,000 on the table. Almost seems worthwhile....

Or the other route is a small mobile/ modular home project to be built out in stages. Much more research is needed here, but the average sale price for land and mobile runs around 200K. A new mobile home runs between 75-90K.

Urban Market

Urban Market research and development is back on track. More updates as they become available.

Well, here's to the future.