Subdividing My SoCal Lot
Our house sits on a lot measuring 120' wide by 215' deep. It is one of several houses built in the early sixties and is now surrounded by tract housing developed in the mid seventies. Our property is among the largest lots in the neighborhood by a long shot.
The property has appraised for $380k last year, and the comps are now around $400k. We owe $220k on it.
The neighborhood is older, but is not run down. We have a San Diego school of the year elementary school a few blocks away, so all in all I think the neighborhood should retain its value for many years.
I had been thinking to remodel and perhaps sell the house, but I realized that we could possibly split the lot and build two houses. We would have demolish our property completely.
Does this sound like a reasonable plan, or is it better to consider this only if there are more lots to subdivide? I know it's a pretty vague question, but what costs should we consider to ballpark this?
Any and all help is appreciated. Thanks!
The first thing I would do is find out from the zoning ordinance what the requirements are in that zoning district for min. lot size, min. lot width, etc. Also tell the zoning officer what you're thinking of doing. The lot size of your property may not be large enough to produce 2 lots.
As for the $$ feasibility here, the first issue (for me) would be what is:
1. the value range of the homes in your immediate neighborhood.
2. the realistic sale price for the total package (new home on the lot).
You'd have at least costs for demolition and utility (public utilities here? if on-site this may not be doable). Talk with building inspector, too for demo and building permit fees.
Need the info for 1 and 2 above.
Nancy
Exactly the person I'd hoped would respond!
There is a 1.7 acre plot of land behind us that the owner is splitting. The conditions set forth by the city include 10,000 sq ft min lot size. I'm using the assumption that I would be constrained by the same 10,000 sq ft size, so I've got enough. I've seen lots in the neighborhood that are at the end of a cul-de-sac that are not much more than the width of the driveway at the street, and widen to a nice size farther back. I would do essentially the same thing. Obviously, I would have to get their take on my proposed lot lines before I got too far into this, but I don't think size or width will be a problem.
Homes in the immediate area have been selling in the high $300k to low $400k range. Almost all of them have been 1500 to 2200 sq ft houses, built in the mid seventies. There is a townhouse development a few blocks away dating to the early '90s with units selling in the $300k to $400k range.
I think I could get high $300k for new houses on the lots. My wife thinks it's more like $450k, but of course this is all moot until we do more dd.
Most lots in the neighborhood hover around 10,000 sq ft, some as low as 7500. The lots I'd have would measure around 12,000.
There are public utilities. Sewer service runs down the middle of the street, phone, cable, and electricity on poles. The land will not require much grading, I don't think there's more than 6 feet of elevation change across the whole lot.
As for the property, keep in mind that the zoning ordinance will probably specify a minimum lot width at the building line, not necessarily at the street. There will probably be a requirement for minimum lot frontage. So perhaps what you'd be talking here is a flag lot. If min. lot size is 10,000 (but verify this), chances are the flag lot will have to be oversized excluding the land area in the "leg" (maybe 1.5 x "regular size" or 15,000). Also, you'll have front, rear and side yard setback requirements. Critical issues are the min. width for a "regular" lot and min. lot frontage given your 120 ft width.
As for the sale values...
If the existing single-family homes in your neighborhood are going for, say $400K, then I would think a new single should be at least $450K. As you indicated, you'll need to verify resale and new home values. But for discussion purposes, assume $400K for resale and $450K for new. If you were to sell the lots to a builder, I would think the value for each lot would be around $130-150K.
Another approach might be to hire a builder as a contractor--not sell the lots to the builder but instead sell the total package (new home on lot) to end users for $450K+. Builder wouldn't start building until you had a signed purchase contract from M/M Jones. Just selling vacant lots obviously wouldn't get you enough.
The municipal subdivision & land devel ordinance would tell you if a 2 lot subdivision with existing frontage would qualify as a "minor subdivision". This could be advantageous as at least here, it's an expedited process.
Quote:
On 2004-05-17 18:08, NancyChadwick wrote:
As for the property, keep in mind that the zoning ordinance will probably specify a minimum lot width at the building line, not necessarily at the street. There will probably be a requirement for minimum lot frontage. So perhaps what you'd be talking here is a flag lot. If min. lot size is 10,000 (but verify this), chances are the flag lot will have to be oversized excluding the land area in the "leg" (maybe 1.5 x "regular size" or 15,000).
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I had planned to make the rear lot larger than the front lot because it was set back from the street and restricts the view (not that there's any real view to speak of).
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Also, you'll have front, rear and side yard setback requirements. Critical issues are the min. width for a "regular" lot and min. lot frontage given your 120 ft width.
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I'm not sure, but I think there's an 8' - 10' setback. There will be plenty of room for that. Other lots on our side of the street (older) are as small as 70' wide. Regular lots in the newer subdivision are 65'. If we use a 30' strip down the side of the front lot, we can have a 10' driveway with 10 buffer on each side. That leaves a 90' width for the front lot, which should be fine. As you say, all this needs to be verified.
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As for the sale values...
If the existing single-family homes in your neighborhood are going for, say $400K, then I would think a new single should be at least $450K. As you indicated, you'll need to verify resale and new home values. But for discussion purposes, assume $400K for resale and $450K for new. If you were to sell the lots to a builder, I would think the value for each lot would be around $130-150K.
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I wouldn't be interested in selling just the lots. I can get $400k right now without doing anything at all.
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Another approach might be to hire a builder as a contractor--not sell the lots to the builder but instead sell the total package (new home on lot) to end users for $450K+. Builder wouldn't start building until you had a signed purchase contract from M/M Jones. Just selling vacant lots obviously wouldn't get you enough.
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My thought had been to get a construction loan and build on spec.
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The municipal subdivision & land devel ordinance would tell you if a 2 lot subdivision with existing frontage would qualify as a "minor subdivision". This could be advantageous as at least here, it's an expedited process.
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I'm into anything that makes this easier!
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I'm reading that new construction is anywhere between $90 and $125 per sq ft. If I put a couple of 2000 sq ft homes on the lots, I can see spending:
Demolition $25k
Land Improvements (utilities, etc) $100k
Construction $400k
Landscaping $75k
So, maybe I can fetch $900k by spending $600k plus the $220k I owe. That leaves profit of $80k. It doesn't seem to pencil out this way, but maybe I'm way overestimating costs? Are my construction cost assumptions correct for two-story houses?
Thanks for weighing in with your opinion on this. Are there any SoCal developers on-line with an opinion on it also? Maybe some local factors I'm not considering?
About the numbers...
$25K for demolition seems high I've seen numbers here for $10K or under to demo houses. Horizontal improvements of $100K seems very high. Unless I'm missing something here, what you're talking about is site prep, permits and tie into existing water and sewer. Don't know what type of landscaping (plantings) you'd being doing but $35K+ per lot seems high. You're going to need budget items for engineering/surveying and legal. Finally, I don't know if you've built houses yourself, but if not, I would be cautious about doing that.
So if we say demo is $10k, horizontal improvement $50k (yes, tie in to existing sewer and water), and $20k for plantings, that puts our profit at $200k, which is much more attractive. You're right, there's more items I'm not considering, like permits and legal, etc. Any back of the cuff guesses at what they might be?
I've never built homes before. I'd pay a GC to come in and do that.
For legal and engineering, I think part of that expense may be related to the issue of whether your property can go as a minor subdivision (if the municipal ordinance in fact provides for such a thing), since both of these items are based on time spent. Suggest you use a RE attorney with land development experience, not have to pay to educate someone who isn't and see if the attorney will give you some fee estimate. As for engr, you may be able to pry out of the municipality what engrg firms have done work with them in the past and then contact them for quotes. I think the engr will have to look at the property to give you a quote. Again, the goal is to get someone who's already familiar with the municipal players and had a positive relationship in the past.
hopefully they don't ask for an impact study
Permits will be higher than expected. Unless your lot is hilly or rocky or has some awefull deformities 100K is way high, I would think 50 more than ample.
right now materials are at an all time high and spiking, metal is up 40% in our area and waferboard is up 300% from last years prices.
IF you get a bid I'll bet they have a clause in their for adjustment on materials prices.