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It sounds like you've never done a development like this before. It is higher speculative with the large number of unknowns they will have never come across before. I know people that have made huge amounts on these developments and some who have done this on a smaller scale. Your big risk is that you will be stuck with a worthless piece of land that you are paying a mortgage on. The next biggest risk is that the cost to develop this may exceed any income. You should seek some professional advice on this but my gut feeling is that you would be overextended if you are stretched by the 20-50% deposit on the land. While I live and work in New Zealand you will probably encounter similar problems. To subdivide you will need a surveyor and an urban planner. Typically a subdivision on this scale would need a particular look to the proposed houses, you would need to pay for roading (traffic/civil engineer would be needed) and services to the site. Note that access to roads is great until you try to get approval of the traffic design. The services include sewage, water and electricity. In New Zealand these services are gifted to the local Council on completion. There may be specific rules relating to these. The size of the land suggests you could fit a large number of houses and there will be rules relating to land area, spacing between buildings (to prevent fire spread) and site coverage. You will likely need an architect to develop some generic house plans unless you can just sell the land subdivided. Dividing such a large area into only four plots seems low to me but I am accustomed to high density developments on the fringe of cities extending out into rural areas. Gut feeling on this is that the overheads to carry out the project will be high for only four plots and my immediate thinking is that making 7 plots would be more attractive depending on the area. However a lot of this will depend on the local market and how long you can wait to sell while bleeding money on a mortgage. There is likely to be a lot of local variation to the rules and some of the advice may not apply or there may be additional rules. I believe your best starting point would be to have a meeting with a surveyor and they could tell you the type of issues they deal with. If they know the site they may have additional information. I would not base the potential profits on the sale of a 6000 sqft house as most of the value of the sale is the house itself. Why not start your first project as something less ambitious and more affordable? Find a property with a single house and a large section that you could subdivide and build on. You'd need enough finance to buy the property but then rent it out/live in it while the works are carried out. Have enough money put aside to build the additional house and complete the subdivision. A site with water, sewage and power at the street would drive the development cost down considerably.
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Feb 10, 2015 05:14
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| # ¿ May 11, 2024 06:20 |
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Hired_Sellout posted:You're right. We've never done this before. It's important to us to consider the "stages" of development we're willing to attempt. The simplest thing is to buy the land, do nothing except maybe selectively clear some timber, and wait. We've got plenty of time to sit on it. Next in complexity would be developing it for our own use; an outcome with which I'd be fine. Next, and stop me if I've skipped a step, would be to do perc tests for septic systems, subdivide into X lots, and sort out a road, curbs, drains, and utilities like cable, internet, and grid hookup. That is probably the most complex endeavor we'd be willing to take on. The next step would be to find the right consultant to make sure you aren't missing anything. Unfortunately all of my experience (while it overlaps a lot) is in New Zealand. We have different rules where you will like have other rules that apply that will involve federal, state/county specific regulations to satisfy. Professional advice costs money but it's worth it if it saves you from problems or costs. Best to get that advice before committing substantial sums to work. It's easy on projects to focus on something that might not be required and add unnecessary costs. If you are comfortable with financing the land and using it for forestry then that at least provides some revenue rather than just being a money pit. If you are experienced at dealing with forestry or have someone who can manage the processes then this is good. What a lot of developers do is buy land in strategic locations and wait for the price and housing demand to increase. This might take years or a decade or two. So if the land is suitable for a forestry investment you could consider a long term forestry project and clear fell the trees in preparation for subdivision in a couple of decades. As I say if there is another source of revenue from the land then the numbers will be more likely to stack up. Assuming it is suited to the purpose. This would also provide another income (even if long term) to fund the costs of subdivision. I just don't want you to end up like one in-law who bought a piece of land from a farmer (a farmer who needed some cash to sold a piece of land) and he thought he'd build a house. Instead there were no services including water, so he decided to plant trees to produce fruit. Of course the trees died due to no water being available. I don't know what he ever did with that piece of land but he probably still owns it for the purpose of growing weeds. My family and extended family carry out forestry/farming and wine making. They either have applicable expertise or pay to get appropriate advice.
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Feb 11, 2015 01:23
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