Smaller Residential Subdivision Development?

[Brandon Schlichter]

I'm curious to hear the stories of anyone who's ever delt with residential development before.

I'm a real estate agent in Central Ohio, and recently got married into a family that seems to center around builders. My wife's uncle is a relatively well respected builder in the area, and has a knack for developing grand floorplan homes.

Anyway , we got to talking, and he said the same thing that i've been thinking about our market place. There are VERY few affordable homes, all the large builders in the area have been building homes in the $140k-$180k range, while many of the new jobs comming into the area pay a rate that doesn't work well with these ranges.

Anyway, we got to talking, and it seems he enjoys building smaller, more affordable homes, rather than the 3k-4k square feet homes he's been doing.

So , the best thing to do would be find lots in an area and build....But there aren't any, in fact in my town there are VERY few lots to build on, and most are splits from already existing, double lots.

So, after talking to him ,it seems the best way to do things would be find an area that's developable and do it.

So, i'm curious to know what pitfalls thoes of you who have done this (Succuessfully) and try to learn.

[Wes Fontaine]

Wow...140K isn't affordable in your area? That's what they're getting for 3-4K sq/ft homes? Thanks for the perspective.

As for developing:

1) Make sure your money is solid (you don't want to run out midstream or if a delay occurs...and something always delays you)

2) Get to know your local governing body (County Commissioners, Building Dept., etc)

3) Don't overpay for the land. Figure your development costs and then figure your per-lot development costs. You'd like your lot cost to be less than or equal to 20-25% of your total sales price (home & lot).

4) Interview a few, and find a good, engineer. This guy can make life easier for you...or a living hell.

5) Do not assume that you will sell all your houses in the first month!!! If you finance the project, you likely won't get your money until the final few houses sell...this can take a long time.

That's a brief "top of my head" sketch. I'll try to come up with some more for you.