How long do you hold lots before building starts?

[Roy Oliphant]

Ok, this is a newbie question but here goes:

Do builders carry an inventory of vacant lots and how long do they hold them before building starts?  If not, who do they get the lots from when they are building spec houses?

I come across a number of below market value lots while looking for other opportunities and am wondering who would be the most interested in them.

Thanks!

Roy

[Karen Margrave]

Builders look at a lot of different criteria when they are considering building spec houses. What is the local real estate market like? Are the lots located in an area with high demand? What are the comps for the area for completed homes? How much inventory is there already on the market in the neighborhood? What are rents in the area? (high or low) Can lots be purchased for a price where it makes sense financially to build? 

If a developer/builder finds lots that make sense, they'll buy them, if they don't, they won't. If you're coming across a bunch of lots below market value, that probably means there's not a demand for housing yet and builders are waiting for the market to tighten. Somewhere in between is where they want to buy the lots!