Ranch Properties

You've decided you want to buy a lot and have a builder to build your new home. Their main concern should be to ensure that the total property value (s say a lot and the house) will be raised and preserved over time. You may be a buyer now, but sooner or later have to sell the property. As a seller, your goal must make a profit on their investment, and this can only happen if you base your decisions on objective data and not emotion. With that in mind, what can be done to preserve the value of your property and avoid making a big mistake?

If you've read my previous articles, then you understand the importance of location and the need to evaluate pairs of plots. In a "buy a lot then build a new home" scenario, the pair consists of the construction of many vacancies want to buy and all the other properties in the immediate area. The value of your potential home site will be affected (for better or worse) by the values and uses of properties nearby. So if you see what you think is a magnificent residential building land which is adjacent to a commercial plot, an industrial building or a quarry, get this: the lot is not great. These neighboring properties "stain" or depress the value of your property.

Another key to preserving the value in this situation is to remember that the project consists of two separate components: the land (the batch of construction) and improvements (for example, the house, sidewalk, pavement, the utilities, landscaping) which would be installed on it. In deciding how much to spend on each component, you must be guided by the values of neighboring properties. For example, you should not pay $ 200,000 for a building lot in an area where many others have sold like $ 150,000. You should not spend $ 400,000 for the total package in a neighborhood where the existing houses on their lots sold for $ 300,000.

The value of the parcel will not increase in direct proportion improvements to be added that if the value of surrounding properties are equal to or less than the value of the land without the improvements added. Where "L" is the lot and "I" represents the improvements, the total value of the property is not going to be L & I. In other words, put a $ 300,000 house on a lot that you have purchased for $ 150,000 dollars do not magically increase the property value to $ 450,000 if adjacent properties (houses on their lots) are being sold for $ 300,000. A good rule of thumb to follow is that the total cost for the project should not be substantially more than the market values of neighboring residential properties.

Suppose that the total budget for project is $ 400,000. How should we decide what to spend separately for land and improvements? Photo of a dog with the tail. In terms of priorities, land is the dog and the house is the tail. That does not mean you should pay more for luck for construction. Yes however mean that you should not choose an undesirable location or challenged because it has a much cheaper price and then dump a lot of money in the house. In the long run, lose asset. Can not recover the money you spend on the bells and whistles for the house when trying to sell the property in the future. Home buyers may love the house, but location or if they hate the feeling that the lot is not desirable, is not going to buy your property or will discount the price they pay for it.

You may have to allocate 30-40% of its budget from $ 400,000 to the cost of land means paying up to $ 150,000 for a construction quality. This would leave with about $ 240,000 for the house (if the cost of site preparation, utilities, permits and other work is $ 10,000). Could you get a house built of 240,000 dollars and if so, could have the features you wanted? The answer depends on the size of the structure, the construction specifications and the cost of construction is being loaded into the construction contract. But regardless of what you spend for your project, just make sure you keep the total cost line with the values of the neighborhood. If you find that this is impossible to do, then the options include changing the specifications of your home, looking for lots in lower priced areas, or reconsider its initial decision to buy a lot and have made a home.

Check out Nancy Chadwick’s new book Buying a Building Lot for Your New Home at http://www.LandBuyingandSelling.com/

Triple Creek Ranch