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Land selling question: adding house or not before selling?

1,256 Views | 9 Replies | Last: 6 yr ago by 88jrt06
AGHouston11
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AG
If you bought a property for a good price under market that is 15.5 acres. Would you sell the property or is there more opportunity to make more money if you placed a house on the property?

Just in general is there money in putting a house on a property then selling it ?
Ragoo
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AG
Where is the property? I would say no.
aezmvp
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Probably a little bit market dependant. Also is the cost of holding an construction worth the return?
07&09Ag
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Personally, when we were looking I would have preferred no house so I could do it the way I wanted.

Also, I am not sure that you could build a house for $200k and the sales price would increase equivalently.

The one advantage is that the potential buyer may have better financing options with a house on the property. Personally, id invest my money elsewhere and sell the raw land
JustPanda
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AG
Land
PV of Land in t=0 - PP = NPV

Land Plus House
FV of Land Plus House in t+x
FV Land Plus House discounted back to t=0 = PV
PV of Land Plus House - PP = NPV L+H

Other Options:

Split Property into multiple parcels (hold all undeveloped)
NPV = Value of Lots in t=0 - PP

Split Property into multiple parcels (develop only specific parcels)
PV of Developed Lots discounted back to t=0
PV - PP = NPV at t=0
PV of Undeveloped lots in t=0
PV - PP NPV at t=0
Add NPV of developed to NPV undeveloped

Split Property into multiple parcels and hold all parcels (developed and undeveloped) until sale of developed.

Which is larger? What is the magnitude?
AGHouston11
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AG
Quote:



The one advantage is that the potential buyer may have better financing options with a house on the property. Personally, id invest my money elsewhere and sell the raw land


This was what I've seen before. Houses were placed and then price was higher because the buyer could get financing for the whole amount.

I know it's hard to answer because of so many variables.

Thanks for the formulas. I'm trying to figure out some of that information. I don't know some of the abbreviations.

Land is in Waller county near Grimes County.

Thanks
88jrt06
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AG
Been there.

Took me 17 mos to sell, mostly because the wives wanted to oversee the house project themselves. Built a terrific home with a great view...*if only* it was spun 45 degrees, etc... The raw land (99 ac next door in Austin Cty) would have sold in about 30 minutes.

Answer your question? Btw, if you have some nice land,
(View, live creek, trees, etc.) you find out "can we finance this" just fades away. MANY cash buyers. Building a house cost me time and some $$. If it's nice, sell the raw land.
JustPanda
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AG
What part of Austin County? If it's by Bellville/ Cat Spring I think I know the property.
88jrt06
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AG
Random Walk said:

What part of Austin County? If it's by Bellville/ Cat Spring I think I know the property.


Close, but a bit north....Nelsonville/159. I looked a LOT in Cat Spring area in the day and love it. Some amazing Live Oaks near water. Hell, I just love Austin County!
JustPanda
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AG
Amen.
88jrt06
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