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| chitowninvest |
 Posted: Mon Oct 03, 2005 10:50 am Post subject: Land Devolopement |
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I have an opprotunity to invest in small land devolopment subdivision. The parcel is only about 10 acres but it is priced right. It would connect to a subdivision that is already established. It also borders a large state owned forest preserve. The person that approached me with the idea is a reputiable builder in the area. He plans on subdividing into 5 to 6 lots and also building homes on each of them. He knows what has to be done with the county and how to set up the deal on a contingency that all plans are approved. Ok so I guess what I am looking for is what to look out for and any general knowledge on problems that may arise a long the way. This would be my first time around on something of this nature so I am just looking to find some advise on the whole idea.
Thanks,
Tony |
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| efflandt |
| Posted: Wed Oct 05, 2005 12:37 am Post subject: |
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I guess the question is, if he is a reputable home builder that has everything in place to develop the property, why isn't he doing that himself? Or is he looking for you to take the investment risk as interest rates rise and the market for new homes softens?
Anyone who finances with a variable rate (especially interest only) loan is going to be in for a surprise as interest rates rise and as the low property tax on an empty lot becomes a 5 figure bill.
A surprise for me when I bought land on contract back in the high interest rates of 80's was when my initial 9% variable rate popped up to 13% after the first year, because I did not know that it had an artificially low introductory rate. Fortunately it was only a 5 yr. contract. While interest rates are lower today, the point is that interest ended up 30-44% higher than I thought it would be (since earlier land contract with same seller and bank was 10% fixed rate). |
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| chitowninvest |
| Posted: Wed Oct 05, 2005 7:39 am Post subject: |
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First off thank you for the reply! The reason I think he is bringing us into the picture is that we have the funds available up front to purchase the property. He has some homes he is just finishing up and a few more projects he has just started.So he is strectched thin for the moment, he also knows there is a dollar amount per day to keep the whole thing rolling to get the homes up as quickly as possible to get them on the market and get them sold before we have to sit on them.
That is a good point that the market is for sure tapering off which does worry me some what. I also never put much thought in on the taxes on each lot becoming there own seperate "LARGE" bill. I still believe that it still could be a prime area to work with but I need to really take a better look at the whole thing before I jump into something that can become a nightmare over night, but I guess thats why I'm posting here in the first place to learn what I can from people that have been in the same scenerio before!
Thanks,
Tony |
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| 1(888)SNOWPLW |
| Posted: Mon Oct 10, 2005 12:26 pm Post subject: developements |
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I found $1 1/3 acre property and the only hitch was the property must be built before 12 months.
The town is nice the developed land is of a serious value.
I was skeptical too, though I figured they want to increase the tax base. |
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