Subject to approvals Multi family Residential

By
Real Estate Broker/Owner with Centum Real Estate Group Lic #10401249650
https://activerain.com/droplet/4Ktn

How do you value land or a building that you are thinking about putting a multi-family building, say 30 units.

What is the land worth?  How do you appraise it as it has no income? 

 

Many investors will buy real estate subject to approvals, if they can get the land approved for a certain amount of units.

An investor may offer $30,000 per unit as they will back into their profits.  Taking into account the money involved in getting approvals such as the attorney, architect, traffic engineer, land use expert, possibly environmental guy (LSRP).

Once this process is done it becomes easier to put a price on the land and the development project as the price per unit becomes more valuable to a developer that doesn't have to speculate on how many units the zoning board is going to approve or spend 6 months to 2 years in the zoning board.

If you are new in real estate it is a great idea to attend these meetings so that you can learn the process of development and what developers actually do besides for the obvious of building a building.  This is a great behind the scenes view of the risk that is taken.

I personally was involved in a project that took almost 2 years to get approved and the town ultimately turned down the development.  Think about spending two years while paying taxes on the properties and all the experts to appear at the towns meetings and not getting approved.

 

 

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Tags:
development
new jersey
multifamily
rutherford
subject to approvals
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Ambassador
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Ralph Gorgoglione
Maui Life Homes / Metro Life Homes - Kihei, HI
Hawaii and California Real Estate (310) 497-9407

Take a look at the county assessor's records.  They will usually separate the land value from the improvement value.

Oct 24, 2015 12:56 PM #1
Rainer
13,995
Otis Duffy
Centum Real Estate Group - Manhattan, NY
Otis Duffy Centum Broker of Record NY & NJ

Thank you for the information.  I don't believe the assessment value is the way to calculate the value a builder would pay to build multi-family.  Thanks.

Oct 24, 2015 01:04 PM #2
Ambassador
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Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Otis Duffy sure it's a good idea to attend these meetings.

And 'subject to approval' is a nice way to delay the risk, I guess.

Oct 24, 2015 02:03 PM #3
Rainmaker
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Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

This is pretty basic information but useful all the same. Good, concise work here!

Oct 24, 2015 04:37 PM #4
Rainmaker
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Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

I've also given you follow, so feel free to follow me back if you have an interest. :)

Oct 24, 2015 04:38 PM #5
Rainmaker
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Kat Palmiotti
Grand Lux Realty, Monroe NY, 914-419-0270, kat@thehousekat.com - Monroe, NY
The House Kat

Two years of spending money while waiting for the wheels of "progress" to move is a long time - especially when tax bills keep coming. Nice overview.

Oct 24, 2015 09:14 PM #6
Rainer
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Sham Reddy CRS
H E R Realty, Dayton, OH - Dayton, OH
CRS

Great post:

It is a great idea to attend Zoning Board meetings to learn the process of development and what developers actually do besides building a building.  This is a great behind the scenes view of the risk that is taken.

Oct 24, 2015 09:23 PM #7
Rainmaker
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Sam Shueh
(408) 425-1601 - San Jose, CA
mba, cdpe, reopro, pe

Suggest title transactions in your county.  I told the owner of a land that she is trying to sell that it is listed 4X higher than average, She wishfully thinks she will get her money back bought at peak. It was a vacational property.  I sent the data to her to keep her head calibrated. Hey they are listed higher than ours... We should bump up the asking price.

Oct 24, 2015 11:08 PM #8
Rainmaker
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Jonathan Hall
William Pitt Sotheby's International Realty - Danbury, CT
Realtor - Danbury,CT Area Real Estate~203-417-0523

In my area, there were recently several large devolpment put in. I reviewed the tax records and they've been around $35,000 to $50,000 per unit for condos and upscale apartments.

Oct 24, 2015 11:25 PM #9
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Karen Fiddler, Broker/Owner
Karen Parsons-Fiddler, Broker 949-510-2395 - Mission Viejo, CA
Orange County & Lake Arrowhead, CA (949)510-2395

There are so many ways we can gain valuable information in our areas. These kinds of meetings are certainly important to attend when possible, even when we aren't new. 

Oct 25, 2015 12:57 AM #10
Rainmaker
1,560,531
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

I have never heard of the value of unimproved land being appraised for the value of future improvements.    If land is FOR SALE it has a price.  It's not adjusted UP for future improvements.  Not sure I understand this post at all.

Oct 25, 2015 05:01 AM #11
Rainer
13,995
Otis Duffy
Centum Real Estate Group - Manhattan, NY
Otis Duffy Centum Broker of Record NY & NJ

I think you may have misunderstood the blog post.  Not sure if you have done development before but developers will pay a certain number for land or a single family that is unapproved for multi-family.

 

For example, 2 houses next to each other that may be worth $300,000 eachand can yield 30 units going up 4 levels would be worth around 30k per unit subject to the developer getting approvals.  Once the approvals are in place the land and plans could sell for say 55k per unit after spending significant time getting the necessary approvals.

I hope this clarifies your question. 

Oct 25, 2015 05:17 AM #12
Rainmaker
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Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Otis Duffy I had some land listed where a developer wrote an offer with a  $25,000 non-refundable EMD pending approval for SF homes. The County dragged their feet which required the developer asking for an extension on the contract with another $25,000 non-refundable deposit. The County didn't come through and the developer lost his $50,000 deposits. It happens!

Oct 26, 2015 01:40 AM #13
Rainmaker
659,456
Randy Prothero
eXp Realty - Mililani, HI
Hawaii REALTOR, (808) 384-5645

Here our dirt is very expensive.  The zoning and location is what makes the biggest difference.  What can you do with the land has the biggest impact.  If I can build a single family home on property in the suburbs and one the same size in Waikiki allows a 60 unit, 10 story building.  You can see they are in different planets on the value.

Oct 26, 2015 01:36 PM #14
Rainer
13,995
Otis Duffy
Centum Real Estate Group - Manhattan, NY
Otis Duffy Centum Broker of Record NY & NJ

Yes Randy that is very true.  The dirt in NYC is very expensive as well being the most populous city in the U.S.  and home to over 6,000 high rises.  When building go up to 104 stories at $3,000 a square foot things can get very expensive. 

Jul 29, 2016 10:50 AM #15
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Rainer
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Otis Duffy

Otis Duffy Centum Broker of Record NY & NJ
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