Is Buying Acerage A Good Investment?

Real Estate Development Blog On Buying Acerage

Hi Colm,

My grandmother is selling her house and 40 acres for about xxx,000.00, do you think it would be a good investment to buy her land and sell acre lots?

How much money does it take to get things started to develop these lots.

Thank you,

C

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From the desk of Colm Dillon ...

Author of "Residential Development Made Easy"

             

Hello C,

Sorry for the delay ... problem is I answer all my own correspondence and I'm only a two fingered typist.

The answer to this question on buying acerage, is quite long. I have answered this type of question before for people, so I am going to search my files for you.

Read between the lines to get the answer you need, because not everybody issue on buying acerage, is the same. But it basically comes down to this:

LAND IS ONLY WORTH WHAT YOU CAN DO WITH IT -so find out what the ZONING of the land allows you to do under your Local Authority Regulations.

In some zones you can only build a house; some zones allow condos; some commercial development like shops & offices; some industrial buildings - you see where I am going? Your land zoning, when buying acerage tells you.

Let's say the 'land use' is changing in the area in which your grandmother's land is located.

Say it's on the city border and is zoned farming or rural, but the residential development is moving towards the farm, due to demand.

Then you may be able to apply to the Local Authority for a "rezoning" of the land from say 'farm use to residential use ... this takes time and money and professions services.

So the question on buying acerage takes a bit of answering ...

Land subdivision is by far the easiest way to start in real estate development ...

I hope that does not insult anyone who has done a subdivision, but subdivision is like buying a large 'slab cake' and cutting it up in slices ... each one big enough for each customer to feel that they are getting good value for the cost.

I didn't say that they weren't profitable ... 'cause they are, but the skill level is not as demanding as actually constructing some group accommodation on a site.

OK, that said, and considering buying acerage, what have I got to say about helping you do a real estate development subdivision?

First of all it follows the same process and procedures as set out in my ebook, it's just that the 'product' is different and you engage different consultants.

But getting back to basics, just like producing any product for market, you must carry out some market research.

Before buying acerage you must know the size of housing blocks that are in demand and selling in your market sector.

Market Research: The good news is that there are many things you can start doing 'right now.' In my ebook I get you started immediately on your own 'Market Research.'

I tell you to turn this activity into a pleasurably experience ... but one that is carried out regularly and with a system behind it.

For example as you are going to subdivide some land in a specific location, I want to visit every subdivision development, not just when it is finished ... I want you to see them at several stages during of construction.

These development show you the best the current market has to offer. Now before buying acerage your job has several facets to it, one of which is to not only assess the current opposition's product, but to come up with ideas that will improve your design.

It is no use just repeating what is already being offered in the market. "Me To's" are not good enough ... this is where you add you're own brand of personal magic, that reflects your personality.

For instance, you might decide to create a special permanent street entrance to the subdivision. It might have special 'cobble' road surface, with a curved natural stone wall on both sides, all topped of with a subdivision Name.

You only 'form' these ideas by KNOWING your opposition's product backwards. By feeding your mind on this stuff, your subconscious takes over, and you start creating.

So you see this is just one aspect of the work you will do before buying acerage ... but I'll just teach you to do it in a structured and more disciplined way.

The lot yield per acre will be determined from this work ... so get it right.

Next, the shape of the land you want to develop is important. Why?

Remember somewhere else I talked about Development Applications ... well embraced in that whole package are rules about 'setback' requirements from boundaries.

That is boundaries from the entire perimeter of the whole site PLUS setbacks from each home that is built on a lot ... so many feet from the front, side and rear boundaries.

In addition there will be a requirement for internal subdivision road-width. So if you think about all that and you are considering buying, what we sometimes refer to as, a hatchet block ... a long handle of land leading from a main road frontage, that opens up into a rectangular shape.

Well, staying with the hatchet analogy for a bit longer:

. Is the handle wide enough for the internal access road, as per Authority Rules?

. Is the handle to wide i.e. after the road is designed, there is wasted space you can't build on?

. Once the road enters the rectangular hatchet head and allows for a right and left turn, do the proposed lots have a marketable depth as well as width.

So you see, once again, even though real estate development subdivision is the easiest of the styles of developments you can undertake, there is still the 'right way to do it, as well as the other way.

Hope this information helps you.

Colm Dillon


Residential Development Made Easy



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