Possible Deals In The Works...
In a nutshell, I used to work for a planning and zoning office in "x" county and met a women who inherited 62 acres w/two other siblings.
She came to our office re: "what can I do with this property?"
I helped her out quite a bit and she was very happy but in the end figured it was more than she/they wanted to "bite off" thus they listed the property for an outrageous amount.
I am no longer w/"x" county and contacted her to see how things were going. The property has not been sold and the asking price is still the same outrageous one as prior. No offers at all, no surprise.
The property has 1200' of frontage on a lake w/public access.
The 1200' is worthless as it is all wetland and houghton muck soils. No private piers going in here...
My question is: I want to work with her and her siblings.
What are my alternatives?
Ideally I would like to partner w/them...
I could also purchase an option...
Or buy it on land contract...
I am meeting her to walk the property next week friday...
HELP
Thanks,
Don
You have hundreds of options and all of them are open to you now. You need to meet with the seller and listen well and ask open ended questions. Find out what she wants and then work to help her get what she wants. Everyone has a button, you just need to know where to push.
It may be that she knows that she has a property that is worth some money but doesn't know what else to do other than try to sell it for this high price. If you are experiencced in developing you may want to try to partner with her.
I don't know what to offer you for suggestions without knowing more. GOOD LUCK
Thanks for the input.
You are 100% correct, Friday when I meet with her I will listen like I have never listened and see what her needs/wants are...and go from there.
Thanks again,
Don
The value of the 62 AC depends on what can be done with them. So, in addition to zoning requirements, issues would also include site layout and yield, cost of horizontal improvements, realistic sale value of the end product (structure on its lot), the seller's terms and conditions (fully contingent v. as is where is purchase), supply and demand.
What uses are permitted by the current zoning?
Nancy,
Current zoning is A-1 residential (3 ac min) and PEC (Primary Environmental Corridor) which requires 5 ac density.
There are about 30 acres of PEC, remainder is zoned A-1.
However, the overall development plan (2025) for the parcel calls for development at no less than 5 acre density.
Thus, the absolute max. would be 12 lots.
One final caveat, the layout in my head has the 30 acres of PEC being placed in an outlot in common ownership.
Doing that allows the County to give me a density bonus (not sure of specifics because I don't have the ordinance in front of me).
No sewer, all will be on-site pending testing obviously.
As mentioned, there is 1200' of frontage but from the lakeshore east is primarily wetland, steep slopes, bad soils.
This coincides, not surprisingly, with the PEC zoning.
Clear as mud, eh? (Pun intended)
Don,
Let me guess....the owner's outrageous price is based on a per-AC fantasy value and not related to yield--correct?
As you said, max yield of 12 lots but could be less depending on testing for on-site sewage disposal systems.
If the seller is, figuratively speaking, smoking weird stuff, this property may have to sit longer on the market.
Do you know what the value of the end product (house on lot) would be?
Nancy
Quote:
On 2004-04-27 23:25, NancyChadwick wrote:
Don,
Let me guess....the owner's outrageous price is based on a per-AC fantasy value and not related to yield--correct?
As you said, max yield of 12 lots but could be less depending on testing for on-site sewage disposal systems.
If the seller is, figuratively speaking, smoking weird stuff, this property may have to sit longer on the market.
Do you know what the value of the end product (house on lot) would be?
Nancy
You're right Nancy, the price is definitely not related to possible yield.
According to my very preliminary analysis, no one in their right mind would give the owner HALF of what she is asking.
The property has been on the market for about 1.5 years.
The value of the end product in this area would be approximately $400-500k.
Don
Don,
If the value of the end product is, say, $450K, then the raw lot value to a builder I would think would be around $113K less the per-lot costs for horizontal improvements. Guess it will come down to the seller's motivation and how long they want to sit there with the fishing line in the water.
Nancy
Exactly my thinking Nancy.
Glad you confirmed that.
As mentioned, I'm meeting her Friday to walk the property and I am going to listen attentively (sic) and move slowly on this one.
If I can sneak in there and partner w/them, I think I am on my way $$$.
I'll keep you posted as to what happens Friday, if interested.
Thanks again,
Don
Don,
I'd be very interested in hearing how things go on Friday. I wonder if all of the siblings are on the same page or whether any of them wants to get on with it and get their money. As you know, time can be an enemy to a seller. Things change, ordinances change, markets go soft. If there was estate tax due, do you know if that has been paid?
Nancy
Update:
I met with two of the siblings on the property Friday.
They pointed out the property boundaries and other, what they perceived to be, pertinent information.
I walked the property myself after talking to them for about 15-20 minutes.
During that time I found that they did grow up on the property but have no special "affinity" for seeing it developed a certain way, etc.
They liked my idea about preserving the 30+/- acres of environmental corridor.
They said they would possibly be open to a partnership but would prefer outright sale, no surprise.
I was honest with them and told them, in my opinion (they also asked), the property was overpriced.
They admitted to sort of picking an arbitrary number and running with it.
They said price was negotiable.
Very nice people and seemed sincere.
After walking the property, which is beautiful BTW, I stopped to talk to the town administrator/planner (he wears both hats).
I told him what I was thinking and he was in some agreement with the "proposal" (i.e. lower density sub w/ common open space).
He gave me the appropriate sections of the zoning ordinance and land division ordinance.
In looking at these, I could do a conservation subdivision (per the Town's definition in the ordinance) and actually get 18 lots out of this with an average required size of 62,436 sq ft.
Comps are running anywhere from 80-150k for roughly the same size lots in the same "style" subdivision.
This could certainly work if I can properly secure this property (i.e. price). Rough numbers indicate that I should offer them about 750k.
They are asking 2.7m, I don't want to insult them.
What should I do?
Any suggestions as to how I could "sell" them on the partnership?
I would prefer, short of a partnership, an option on the property.
HELP!
I want to make this happen.
Don,
Thanks for your update.
My approach would be to try to educate the siblings--face to face and on paper--not only about the municipal approval process, but also about value being relative to use and the fact that ultimately, the number of lots will be determined by suitability for on-site systems and, of course, the municipality.
I have not found any easy way of doing this. It requires much time and effort to walk "laypeople" through step by step and show them that:
1. the number of acres in the property is virtually a meaningless statistic
2. you (or whoever) will have to incur substantial expense for hard and soft costs to "transform" this property into a viable residential development
3. as the developer attempting to achieve that transformation, you will be at risk and have no control over what the municipality decides and the site features and constraints
4. time is their enemy. The value of the property doesn't necessarily increase over time. It could very well decrease if ordinances change and/or market conditions change. Once you start the approval process, it will take X amount of time to complete. There is no advantage to them to continue to keep the fishing line in the water.
They have overpriced the property by nearly $2mil. Even if ordinances don't change and market conditions don't go soft, how many years will it take for the market to catch up with their price? How long are they willing to wait? Their property is going to become "shopworn" from staying on the market. It's like putting a house up for sale that's worth $200K but expecting a buyer to pay over $600K for it.
Nancy
Nancy,
I'm currently working on refining my pro-forma.
I will then be putting together a "package" with an offer that I will present to them.
The package will essentially outline (read: justify) my reason for the offer I am making.
It will also include different "options" such as a partnership, etc.
I'm in touch with some of my builder contacts to try and get a gauge of the interest (i.e. pre-selling).
I've done a good portion of my due diligence.
As mentioned, I am going to refine my financial analysis.
Put a package together and present it to the owners. (first choice being a partnership, second being an option, etc.)
I feel confident in what I am doing here plus I have nothing to lose.
I also have faith in my attorney and he will be involved.
Any further input or ideas from the experts?
Thanks
Don
Nancy,
Question...
Quick update, I am meeting w/all three siblings next week.
I've got my excel spreadsheets ready to go but set up for ease of understanding. (i.e. it is obvious when broken down that they are asking way too much)
HOWEVER, although I have tried from numerous sources, I am still unsure of my road costs.
You refer to horizontal improvements, does the $150/250 per lf include ROW???
I assume that is just for utilities.
So in short, my question is
Do you (or anyone else) have a road construction cost per lf or sq ft that you use in your pro-forma or whatever you want to call it??? :-o
This would be for a "rural" cross-section (no curb/gutter) 12' travel lanes, 2" bit. concrete surface course, 2" bit. concrete base course, 10" base material (5"-3/4" crushed gravel and 5"-1 1/2" crushed stone)...
Thanks.
Don
Also,
I wanted to apologize for the misnomer in the Topic title...
I WISH I had possible deals in the works.
The reality is I have a possible deal in the works
don
Don,
The $150-250/LF includes components of the (how I hate to use the term) "infrastructure". However, where it's on-site utilities, I add the costs of well & septic in addition to the $150/LF. Also, if any extraordinary costs (ie, off-site items), I add something for that, too. You might also find some cost info from woodsong at:
http://www.thecreativeinvestor.com/modules.php?op=modload&name=Forum&file=viewtopic&topic=26709&forum=26&start=42
Nancy