Land Improvement Question

I have found a lot for $89,000 in a subidivision with 500-750,000 homes and was wondering if I buy the lot and clear out the trees and brush on it, would it increase the land value generally? I just figure with high priced neighborhood, I could flip it quickly after I clean the lot up.

Howdy Gusrock1414:

After you figure closing costs in and out and financing costs and lot clearing costs I doubt you can get your money back unless the lot is way under valued and it seems to be retail to me. Builders usually figure about 20% of the total price of the house for the lot costs.

But 20 percent of 600,000 is 120,000 for the lot. How much would it cost to clean the lot up? Its only about 2 ac. I figure I can make a decent profit if i could get it for 80,000. I respect your advice so please dont hesitate to call me an idiot for my reasoning.

Howdy Gusrock1414:

Wow my math was off at 5am this morning. I have been going strong since then too. Best just to find some comps and figure the costs and see if you can make a profit. If you can get it for $80K and clean it up for a few grand and sell for $100K pretty fast you may do OK if you can sell it yourself without a Realtor. Just double check all your expenses to close and clean and the carrying costs and property taxes and figure how much profit you need to make and see if it works. Give yourself a little cushion.

A few years ago, I looked at building a house and ran across homes called steel framed homes… these home go up like erector sets. they have the foundation like traditional homes but the components are shipped from a factory like Manufactured homes and it takes (per the brochure I received 3-4 people to put up the frames, ect.

These homes supposedly have built in equity by the time they are completed because the costs is less than a traditional brick, wood, mortar home. Now let’s just suppose that people who like to buy raw land let’s say 2 acres put up one of these homes what would that do to the value of the land. If you are really handly, you could do all the work yourself and really save a bundle… A list of all finishing products are included with your “home”. does that make any sense.

I am just a dreamer… I dream things like this but would that make sense. I am leaving this website now to see If I can find that information again??? But tell me what you think.

The reason I ask, is that getting loans for raw land is awfully hard but just one house on 2 acres with the possibility of building 3-4 would certainly increse the value of that property in a hurry.