Land investors who wish to invest, either to "develop" the land (as defined in this Land Development Values Series) or to build and sell an entire package on that lot (e.g. new homes on their lot) must sift though many parcels. Everyone wants to try to convince them to purchase a property. The process of identifying the parcels that are worth pursuing, therefore, is very time consuming, and land buyers need tools to enable them to quickly weed out the junk and identify those parcels that warrant further consideration. Typically, buyers use formulas and rule of thumbs to do their preliminary screening. These guidelines provide rough estimates on the yield of the site and various cost factors. These are the main aspects that determine the "right' price to pay Land Clearing near me for land. Land buyers can quickly determine if a seller's price is reasonable by determining the price where the numbers will work. If the land parcel is substantially overpriced, the buyers can simply discard the property and move on to better prospects. Commercial Land Developments As is to be expected, the methods for estimating site yields and costs of improvements are different for residential and commercial land developments. For retail or offices parcels, the yield represents the amount of possible building space. The yield is a function of how many parking spaces can be built on the parcel, and the development limitations imposed by impervious cover and green space requirements as set forth by the zoning regulations. For example, one rule of hand might be used for estimating the total area of land required to park each vehicle on the property. Another would approximate the amount of land area taken up by sidewalks and walkways. The third rule is to assume that improvements vertically and horizontally will cost $100/sq. Office space is measured in square feet. Residential Land Developments The rules of thumb applied to residential land developments would be designed to estimate the number of building lots that the parcel could produce once the subdivision had been completed, and the cost for horizontal improvements. The value per "raw" building parcel would be calculated by calculating the value of the completed product (the home on its own lot) as well the cost for horizontal improvements. The site yield rule might be to subtract the total land area from the parcel and then divide that by the minimum size lot required by zoning in order to arrive at the number lots. As an example, a 15-acre vacant parcel zoned at 20,000 sq.ft. might be calculated as follows. ft. lots: Step 1: 43,560 sq. ft. x 15 acres = 653,400 sq. ft. Step 2: 653,400 sq. ft. x 70% = 457,380 sq. ft. Step 3: 457,380 sq. ft. divided by 20,000 sq. ft. = 22.87 building lots This parcel would have approximately 22 building lots. In the next step, 30 percent of the site's gross area was subtracted to account both for the wastage of land, the square footage lost because of natural constraints like slopes and floodplains as well as the area of land that would have been taken up by roads in the neighborhood. Be aware that local rules of thumb will vary. The rough figures are estimates and should be modified as needed. A substantial portion of a 15 acre parcel would have to be in floodplain for it to make sense to take only 30% off the total gross site. Be conservative if you don't know what rule to use.
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