Warning

 

Close

Confirm Action

Are you sure you wish to do this?

Confirm Cancel
Member Login
Site Notices
9/22/2017 12:11:25 AM
Posted: 2/9/2006 6:00:56 PM EDT
Anyone here have any expierence with developing a sub division? I have found a good piece of land around 65 acres that has a good mix of trees, creek, and tank that is located in a prime spot. The price is high but not unreasonable.

I have never ventured in anything like this before but have the needed contacts for funding. I estimate the purchase price to be about 1.4m for the raw land. My question is, does anyone know a average price (in Texas, DFW area) of what it would cost to put in roads, electric, and phone? I've guestimated that it will be around 800k-1m for fees, engineering, streets, utilities (not water or sewer, will be serviced by septic and well). I don't know if this number is reasonable or not. I was wondering if anyone knows of an average price per acre to develop it? I figure the land will hold about 50 one acre lots.

Link Posted: 2/9/2006 9:20:22 PM EDT
I am not familiar with that area.

Your contact for funding should know and would want to know these costs.

It will be very tough, if not impossible to get funding from a bank for a spec builder-developer project with little or no pre-sold homes.
Link Posted: 2/11/2006 5:05:59 PM EDT
One thing for certain about real estate developers - they always get in over their head. Projections and estimates always come in over budget. And pretty soon they are looking to bail themselves out. At a loss. Don't do it.

Link Posted: 2/11/2006 5:51:50 PM EDT

Originally Posted By Stormtrooper:
One thing for certain about real estate developers - they always get in over their head. Projections and estimates always come in over budget. And pretty soon they are looking to bail themselves out. At a loss. Don't do it.




I've taken that into consideration.

My contact I have does this for a living and will require a proposal with estimates first and foremost. He wouldn't risk his money if it doesn't look promising.
Link Posted: 2/12/2006 4:24:56 PM EDT
I don't know the costs off-hand, but as a traffic engineer I work with alot of developers, helping them get through all the hoops that city and state put in front of them. They get nickle and dimed to death, and everything takes twice as long as it should. Costs will vary alot, even by what jurisdiction you're in. There's some cities that I have to charge more for, just because I know they are a pain in the ass to get stuff approved. Are you inside city limits, or in ETJ, or in truly unincorporated land? Expecting access to TxDOT roadways? Where is the nearest electric/gas service? Drainage/floodplain/wetlands, political considerations etc.

My company does all aspects of civil engineering for development, we do tons of work nationwide for both large and small developers and homebuilders (and commercial work, etc). We have offices in Dallas, FW, Frisco, etc. Email or IM me and I can have someone contact you who will know more about the costs.

If you're at $1.4M for the land and $1M to get lots ready to sell, for 50 lots you're at $48k per acre lot... seems high to me if it's not near/on a lake. But I am not a real estate person.

Link Posted: 2/12/2006 4:45:52 PM EDT
Got high-level contacts in the local city or county? If not, forget about ever being allowed to do such a thing. I know three people that spent their life savings and years of their life to try to develop neighborhoods in this county, and none of the three were allowed to sell a single lot. Two of them were bought by a former mayor, and in less than six months he was allowed to start selling lots. The other one was bought by a city council member, and he was allowed to start selling lots about a year after he bought the land. He paid around $500k for the land and sold about 300 lots. Two of the lots I saw were $20k, so he grossed about $6 million. Another developer made a lot of money here in the late 50's and early 60's developing two huge neighborhoods, but when he tried to do the same again about 10 years ago, he wasn't able to get permission since he had been so vocal about a problem in the city police department a few years before that. Despite his track record of building nice neighborhoods, he still wasn't allowed to do it. If you don't have the contacts, forget about ever being allowed to do something like that.

Nicholastheczar, easier money would probably be to negotiate a finder's fee with a developer that has connections. If it really is good land, you could make an easy $50k or more immediately rather than waiting on a return and without taking a risk. Even only a year wait before you can start building could bankrupt you in property taxes and interest. About 20 years ago I made $20k from a fast food company for finding a great location for them, so I assume $50k would be an appropriate minimum for a property that expensive.z
Link Posted: 2/13/2006 1:22:37 PM EDT

Originally Posted By mPisi:
I don't know the costs off-hand, but as a traffic engineer I work with alot of developers, helping them get through all the hoops that city and state put in front of them. They get nickle and dimed to death, and everything takes twice as long as it should. Costs will vary alot, even by what jurisdiction you're in. There's some cities that I have to charge more for, just because I know they are a pain in the ass to get stuff approved. Are you inside city limits, or in ETJ, or in truly unincorporated land? Expecting access to TxDOT roadways? Where is the nearest electric/gas service? Drainage/floodplain/wetlands, political considerations etc.

My company does all aspects of civil engineering for development, we do tons of work nationwide for both large and small developers and homebuilders (and commercial work, etc). We have offices in Dallas, FW, Frisco, etc. Email or IM me and I can have someone contact you who will know more about the costs.

If you're at $1.4M for the land and $1M to get lots ready to sell, for 50 lots you're at $48k per acre lot... seems high to me if it's not near/on a lake. But I am not a real estate person.




I will IM you.
Link Posted: 2/13/2006 1:24:08 PM EDT

Originally Posted By zoom:
Got high-level contacts in the local city or county? If not, forget about ever being allowed to do such a thing. I know three people that spent their life savings and years of their life to try to develop neighborhoods in this county, and none of the three were allowed to sell a single lot. Two of them were bought by a former mayor, and in less than six months he was allowed to start selling lots. The other one was bought by a city council member, and he was allowed to start selling lots about a year after he bought the land. He paid around $500k for the land and sold about 300 lots. Two of the lots I saw were $20k, so he grossed about $6 million. Another developer made a lot of money here in the late 50's and early 60's developing two huge neighborhoods, but when he tried to do the same again about 10 years ago, he wasn't able to get permission since he had been so vocal about a problem in the city police department a few years before that. Despite his track record of building nice neighborhoods, he still wasn't allowed to do it. If you don't have the contacts, forget about ever being allowed to do something like that.

Nicholastheczar, easier money would probably be to negotiate a finder's fee with a developer that has connections. If it really is good land, you could make an easy $50k or more immediately rather than waiting on a return and without taking a risk. Even only a year wait before you can start building could bankrupt you in property taxes and interest. About 20 years ago I made $20k from a fast food company for finding a great location for them, so I assume $50k would be an appropriate minimum for a property that expensive.z



This area sounds different than what you have had dealing with. There is a lot of new development going in and the city is growing fast. I will keep in mind what you mentioned about a finders fee, that could be a good route to go as well.

Nick
Link Posted: 2/13/2006 3:24:05 PM EDT

Originally Posted By Nicholastheczar:
Anyone here have any expierence with developing a sub division? I have found a good piece of land around 65 acres that has a good mix of trees, creek, and tank that is located in a prime spot. The price is high but not unreasonable.

I have never ventured in anything like this before but have the needed contacts for funding. I estimate the purchase price to be about 1.4m for the raw land. My question is, does anyone know a average price (in Texas, DFW area) of what it would cost to put in roads, electric, and phone? I've guestimated that it will be around 800k-1m for fees, engineering, streets, utilities (not water or sewer, will be serviced by septic and well). I don't know if this number is reasonable or not. I was wondering if anyone knows of an average price per acre to develop it? I figure the land will hold about 50 one acre lots.




What do you bring to the table - are you a contractor? If you haven't done anything of this scale before, most investors will laugh at you. In this inherently risky venture, what do you have to ensure success?
Link Posted: 2/13/2006 5:11:20 PM EDT

Originally Posted By PeteCO:

Originally Posted By Nicholastheczar:
Anyone here have any expierence with developing a sub division? I have found a good piece of land around 65 acres that has a good mix of trees, creek, and tank that is located in a prime spot. The price is high but not unreasonable.

I have never ventured in anything like this before but have the needed contacts for funding. I estimate the purchase price to be about 1.4m for the raw land. My question is, does anyone know a average price (in Texas, DFW area) of what it would cost to put in roads, electric, and phone? I've guestimated that it will be around 800k-1m for fees, engineering, streets, utilities (not water or sewer, will be serviced by septic and well). I don't know if this number is reasonable or not. I was wondering if anyone knows of an average price per acre to develop it? I figure the land will hold about 50 one acre lots.




What do you bring to the table - are you a contractor? If you haven't done anything of this scale before, most investors will laugh at you. In this inherently risky venture, what do you have to ensure success?



I am getting into the family business of residential and commercial construction that has approximately 60 years experience. The company has developed residential developments before but this one is my idea. So, I've been tasked with doing all of the homework. I myself have never done anything like this, but the company has. Once I get my proposal together, it will be revised and added to (after a careful eye has looked over it) and then submitted.

No one has anything that will ensure success but based on population density growth projections and trends, historical data, and similar residential development data, I plan on having enough hard evidence to support my proposal.
Link Posted: 2/14/2006 6:55:47 AM EDT

Originally Posted By Nicholastheczar:

Originally Posted By PeteCO:

Originally Posted By Nicholastheczar:
Anyone here have any expierence with developing a sub division? I have found a good piece of land around 65 acres that has a good mix of trees, creek, and tank that is located in a prime spot. The price is high but not unreasonable.

I have never ventured in anything like this before but have the needed contacts for funding. I estimate the purchase price to be about 1.4m for the raw land. My question is, does anyone know a average price (in Texas, DFW area) of what it would cost to put in roads, electric, and phone? I've guestimated that it will be around 800k-1m for fees, engineering, streets, utilities (not water or sewer, will be serviced by septic and well). I don't know if this number is reasonable or not. I was wondering if anyone knows of an average price per acre to develop it? I figure the land will hold about 50 one acre lots.






What do you bring to the table - are you a contractor? If you haven't done anything of this scale before, most investors will laugh at you. In this inherently risky venture, what do you have to ensure success?



I am getting into the family business of residential and commercial construction that has approximately 60 years experience. The company has developed residential developments before but this one is my idea. So, I've been tasked with doing all of the homework. I myself have never done anything like this, but the company has. Once I get my proposal together, it will be revised and added to (after a careful eye has looked over it) and then submitted.

No one has anything that will ensure success but based on population density growth projections and trends, historical data, and similar residential development data, I plan on having enough hard evidence to support my proposal.



Well, if your family has been in developing for 60+ years, what are you doing asking retards like us for advice. You have all the information you need right at your fingertips. Sounds like a harsh way to learn - throwing you to the wolves like that. I would think you would ride under somebody's wing for a few projects before they let you venture out on your own.hmmm
Link Posted: 2/14/2006 3:06:03 PM EDT

Originally Posted By Stormtrooper:

Originally Posted By Nicholastheczar:

Originally Posted By PeteCO:

Originally Posted By Nicholastheczar:
Anyone here have any expierence with developing a sub division? I have found a good piece of land around 65 acres that has a good mix of trees, creek, and tank that is located in a prime spot. The price is high but not unreasonable.

I have never ventured in anything like this before but have the needed contacts for funding. I estimate the purchase price to be about 1.4m for the raw land. My question is, does anyone know a average price (in Texas, DFW area) of what it would cost to put in roads, electric, and phone? I've guestimated that it will be around 800k-1m for fees, engineering, streets, utilities (not water or sewer, will be serviced by septic and well). I don't know if this number is reasonable or not. I was wondering if anyone knows of an average price per acre to develop it? I figure the land will hold about 50 one acre lots.






What do you bring to the table - are you a contractor? If you haven't done anything of this scale before, most investors will laugh at you. In this inherently risky venture, what do you have to ensure success?



I am getting into the family business of residential and commercial construction that has approximately 60 years experience. The company has developed residential developments before but this one is my idea. So, I've been tasked with doing all of the homework. I myself have never done anything like this, but the company has. Once I get my proposal together, it will be revised and added to (after a careful eye has looked over it) and then submitted.

No one has anything that will ensure success but based on population density growth projections and trends, historical data, and similar residential development data, I plan on having enough hard evidence to support my proposal.



Well, if your family has been in developing for 60+ years, what are you doing asking retards like us for advice. You have all the information you need right at your fingertips. Sounds like a harsh way to learn - throwing you to the wolves like that. I would think you would ride under somebody's wing for a few projects before they let you venture out on your own.hmmm



Guess I should have clarified a little more. The company, a small business, has 60 years of commercial and residential construction expierence, not 60 years of land development expierence. It has done developments before in the past in, but the primary focus is construction not development. I am completely new to this.

Let me clarify, the business has never been this invovled in the actual development of raw land. They have partnered with other companies that have handled the developmental aspect and the construction was our end of it. So this is somewhat new. The way I look at it is there is money to be made in the development end of it if you cut out the middle man. That way you see the profit from the land sales to the consumer rather than going from the developer, to consumer, to the builder. But we will see.

As far as throwing me to the wolves, I enjoy this. It may end up that it will not work at all, but I have learn a lot in the short time I have been researching this. But hopefully it does work.
Link Posted: 2/15/2006 12:54:16 PM EDT
Why don't you start on something smaller, like 3-5 houses?

That way if you fail, the financial burden/loss would be less.
Link Posted: 2/15/2006 6:39:52 PM EDT

Originally Posted By shootemup:
Why don't you start on something smaller, like 3-5 houses?

That way if you fail, the financial burden/loss would be less.



There is nothing available (in this area) land wise for development that small.
Link Posted: 2/15/2006 7:24:52 PM EDT
There's alot of costs (roads, utilities, permits, etc) that have too much of an effect without being able to spread the cost over alot of lots. Kinda like guys complain about a $10k or more bill to run electric up to their cabin in the sticks. Split over 10 or 100 lots that cost is bearable, since the incremental cost for additional units after the first one is pretty small.
Link Posted: 2/17/2006 6:43:21 PM EDT
This is something that a friend and I are conspiring on right now. I have been in the golf business and he is a home builder so we are looking at doing a golf community. My first question to you would be this, who is your target audience? The last development that I was a part of never answered this question and 5 years later they are still struggling badly.

In DFW with one acre lots I would imagine you are looking at a fairly pricey house to be viable. Is there anything besides the size of the lot that would warrant a $50,000 lot? The reason that I ask is that in Austin that is not an unresonable lot price, but not knowing where in the Metroplex you are it is hard to know. If there are other developments in the area try to find out what they are going for. Maybe 1/2 acre lots would be more lucrative. Get a survey of the land and start drawing lot lines, you need to know how much land you will lose to utilities and roads. Also don't be fraid to have different lot sizes, it allows people to get into a good development at a lower price point.

In my experience it seems to me that most development fail due to lack of cost control and lack of a definitive market. Always know where the money is going and work with your banker/investors, I have seen what happens when you don't keep them in the loop.

Good luck,

96Ag
Link Posted: 2/18/2006 7:12:45 AM EDT

Originally Posted By 96Ag:
This is something that a friend and I are conspiring on right now. I have been in the golf business and he is a home builder so we are looking at doing a golf community. My first question to you would be this, who is your target audience? The last development that I was a part of never answered this question and 5 years later they are still struggling badly.

In DFW with one acre lots I would imagine you are looking at a fairly pricey house to be viable. Is there anything besides the size of the lot that would warrant a $50,000 lot? The reason that I ask is that in Austin that is not an unresonable lot price, but not knowing where in the Metroplex you are it is hard to know. If there are other developments in the area try to find out what they are going for. Maybe 1/2 acre lots would be more lucrative. Get a survey of the land and start drawing lot lines, you need to know how much land you will lose to utilities and roads. Also don't be fraid to have different lot sizes, it allows people to get into a good development at a lower price point.

In my experience it seems to me that most development fail due to lack of cost control and lack of a definitive market. Always know where the money is going and work with your banker/investors, I have seen what happens when you don't keep them in the loop.

Good luck,

96Ag



From what I can tell, the market in the area that I am looking at can support $50k - $100k lot prices which range from 1ac - 7 ac. There are 1 ac lots that are in gated communities that are going for 100k.

My target market would be single family homes from 2700sq ft to 4000 sq ft, with an emphasis on the lower end of 2700 - 3200. Some lots would possibly allow, based on dead restrictions, the option of putting horses the property (1 horse per every 2 ac of land). Based on market research, this area seems to support this type of lot development.
Link Posted: 2/18/2006 1:19:43 PM EDT
It looks like you have done some homework. Here's a question, would you just sell lots and let people build custom homes with requirements, or would your family or someone else be building spec houses? Would you sell groups of lots to a homebuilder?

These are just curiosity questions that I have come across in my experience, I 've seen both good and bad from each approach.

Another thought, depending on the expected demographic, a sports complex that could be rented out could be a money maker if you wanted to maintain some income from the property. I went to a conference in January and one session was about the dollar impact of youth sports. If you think a lot of families would be there and there is no other location near by for athletics it could be, as I said, a money maker and even a potential selling point.

Just thoughts, these and $4.95 will get you a cup of mediocre coffee.

96Ag
Link Posted: 2/18/2006 4:26:30 PM EDT

Originally Posted By 96Ag:
It looks like you have done some homework. Here's a question, would you just sell lots and let people build custom homes with requirements, or would your family or someone else be building spec houses? Would you sell groups of lots to a homebuilder?

These are just curiosity questions that I have come across in my experience, I 've seen both good and bad from each approach.

Another thought, depending on the expected demographic, a sports complex that could be rented out could be a money maker if you wanted to maintain some income from the property. I went to a conference in January and one session was about the dollar impact of youth sports. If you think a lot of families would be there and there is no other location near by for athletics it could be, as I said, a money maker and even a potential selling point.

Just thoughts, these and $4.95 will get you a cup of mediocre coffee.

96Ag



96Ag,

Good questions. What I am thinking as of now is during and after development, allowing anyone who wished to purchase lot sites to do so. I would probably keep a few of the lots to build some homes on myself but would welcome other builders to come in and build. I believe that if you have an area with several different builders it helps keep the development "unique" by getting different looks and styles of homes. I am not a fan of the track style development where every single house looks the same. As long as the deed restrictions are followed I would be more than happy to sell to builders or individuals.

As far as the sports end of it goes, interesting idea. The only drawback for this property would be use of the land. I don't think this development would support any type of facility like that. Would probably eat up to much acreage which wouldn't allow me to offset the costs of development into each lot accordingly. One thing I did think about along the same lines would be small community areas for the residents of the development that could be as small as picnic spots to a pool. But that is further down the road.
Link Posted: 2/20/2006 1:50:42 PM EDT
Wow.

There is a lot to do and you have a lot of decisions to make.

Even wealthy developers don't usually go it alone on deals like this.

If your area will truly be desirable, go to the area builders show them your plans and get commitments for lots from them that you can take to the bank. you may have to offer them discounts to get them to committ but it will probably be worth it in the end.

Do the development in phases and use the profit from the first phase to help finance the second phase and so on.

First thing I would do is see what the codes are for the area. Around here roads have to be built to the cities approval and then donated to the city. Those roads and utilities cost $400 to $450/Foot. That is NOT a typo. $400 to $450/ foot. If you are in the country you might get away with a "blacktop" road. That will cost less but it will also make your lots be worth less.

I would look at the layout of the piece of property and see if there are lots that can be cut out that can be built on using existing infrastructure. If you can sell a few lots at first without spending money on the roads and utilities do it.

I don't think that you can make this work with only 50 lots. Even if you sell them for $100,000 each.

Good luck.

Link Posted: 2/21/2006 5:51:05 PM EDT

Originally Posted By krpind:
Wow.

There is a lot to do and you have a lot of decisions to make.

Even wealthy developers don't usually go it alone on deals like this.

If your area will truly be desirable, go to the area builders show them your plans and get commitments for lots from them that you can take to the bank. you may have to offer them discounts to get them to committ but it will probably be worth it in the end.

Do the development in phases and use the profit from the first phase to help finance the second phase and so on.

First thing I would do is see what the codes are for the area. Around here roads have to be built to the cities approval and then donated to the city. Those roads and utilities cost $400 to $450/Foot. That is NOT a typo. $400 to $450/ foot. If you are in the country you might get away with a "blacktop" road. That will cost less but it will also make your lots be worth less.

I would look at the layout of the piece of property and see if there are lots that can be cut out that can be built on using existing infrastructure. If you can sell a few lots at first without spending money on the roads and utilities do it.

I don't think that you can make this work with only 50 lots. Even if you sell them for $100,000 each.

Good luck.




It can be done with 50 lots and has been done several times over with 50 or less lots by other developers. There are sub divisions going in that have only 20 lots and have done very well. I have crunched the numbers and have met and talked with the necessary people and it is looking doable.
Link Posted: 2/21/2006 8:49:11 PM EDT

Originally Posted By Nicholastheczar:

It can be done with 50 lots and has been done several times over with 50 or less lots by other developers. There are sub divisions going in that have only 20 lots and have done very well. I have crunched the numbers and have met and talked with the necessary people and it is looking doable.



Sounds like you have a plan.

Good Luck.

Top Top