Ways To Get a Building Lot For Your Home

There are several ways you can get a lot for your new home. Most of these methods do not require you to buy a vacant lot that's already been subdivided. For instance, you could purchase:

1. A portion of someone's property.

Once you had a signed purchase contract with the owner, you'd have to subdivide the land off from their property before you could take title to the lot. But finding a property owner willing to sell you a portion of their land could be difficult, and getting the land at a reasonable price might be even tougher. Your offer should specify that you would be responsible for paying the costs associated with the subdivision because then you have more control over the work being done, time frames, and the expenses charged.

2. An existing house on its lot.

You would destroy the house and then build new. However, what you do not want to do is overpay for improvements (ie, existing house) that are going to be torn down. Since your offer price for the property should take into account the cost of demotion, you should get estimations for removal of the existing house before submitting your offer.

3. A land parcel (vacant or not).

The parcel would have to have sufficient frontage and area to produce 2 or 3 separate lots with all of the lots fronting on the existing street. The objective is to avoid construction of a new street. You want to create a "turn-key" scenario: subdivide the original property, record the plan, and sell off whatever lots you do not keep for your new home. With the lots fronting on the existing street, your target market would not be limited to builders. It could also include people interested in buying just one lot for either investment or the future construction of their homes. If the original parcel included an existing house, so much the better, as long as the house had some value and its location within the land parcel would not mess up an efficient subdivision of the entire property.

The following examples illustrate the difference in land cost between buying one lot and buying a parcel that could be subdivided.

Example A:

2 acre vacant land parcel zoned for single-family detached housing on 30,000 sq. ft. lots; public water and sewer; asking price is $ 200,000; assumed yield: 2 lots

Your cost for the property is reduced by the price that you can get in selling off the second lot. So, for instance, if you sell the second lot for $ 150,000, your total cost for the land portion of your new home project is $ 50,000 (plus subdivision expenses).

Purchase price: $ 200,000 ($ 100,000 per lot)

Less sale of second lot: $ 150,000

Effective land cost: $ 50,000 (plus subdivision expenses)

Gross savings: $ 150,000

Example B:

2 acre parcel zoned for single-family detached housing on 30,000 sq. ft. lots; public water and sewer; the existing house on a lot is worth $ 250,000; asking price is $ 300,000; assumed yield: 1 building lot + existing house on its own lot

Purchase price: $ 300,000 ($ 150,000 per lot)

Less sale of existing house on its lot: $ 250,000

Effective land cost: $ 50,000 (plus subdivision expenses)

Gross savings: $ 250,000

Example C:

2 acre vacant land parcel zoned for single-family detached housing on 80,000 sq. ft. lots (can not be further subdivided); public water and sewer; asking price is $ 200,000

Your land cost is the highest in Example C ($ 200,000) because you're buying one vacant lot that can not be subdivided. The subdivision necessary in the other examples is not going to run $ 150,000-250,000 (the amount of your gross savings). To get a good idea of ​​what the expense would be, contact civil engineers in your area. Ask them what they'd charge to do a small (2 or 3 parcel residential subdivision). This type of subdivision may be considered by some municipalities as a "simple" or "minor" subdivision based on the total number of lots and the fact that no new street would have to be constructed. Make sure you consult a real estate attorney for advice and to see that your purchase contract covers your flank.