Atlanta subdividing costs

[Hart Pearson]

Hey BP! Considering tackling our first subdivision. Any insight is welcome! 20 acres in Atlanta suburb. Zoning appropriate for 13 lots (1+acre) will need 1600 ft of street developed and a fair amount of land clearing (mostly wooded). Not in floodplain. What I know that I don’t know... -Costs of street development and utility extensions (public water and septic) -Approval process for subdividing, what should I make contract contingent on to protect myself (approvals, soil tests, stormwater etc) -Is there a form of financing people generally use? My instinct is to finance the house conventionally and bring cash or partners for the rest. But then there’s a mortgage on the whole parcel when I go to subdivide. Idk... help please. Done a few dozen BRRR’s and Flips. This is new.

[Danny Kay]

Likely going to fall into A&D type lending, vs construction loan (due to the infrastructure). I can't imagine 'traditional/conventional' loans/banks being at all interested. I have contacted quite a few banks in 18' just to see who does A&D, I came up with maybe 2 names (but I am sure there are more). Relationships and past experience pay a huge part, my experience is meetings with banks can be more like interviews than you may expect.

Terms for your contract... tie up the land for as long as you absolutely can while you go though DD ,Design, Permitting.

Costs per LF of roadway are all over the place and highly dependent on numerous other factors.

good luck!

[Hart Pearson]

Thanks for the reply Danny... My thought with the conventional loan was just to get control.... but I think that's risky given the potential roadblocks to development. Don't want to get stuck with an overpriced house on a huge lot that I can't move forward subdividing. Have you done any subdividing in Atl. area yet? Is it a bad venture?

[Danny Kay]

Yes I have had several subdiving projects (small and larger-ish) in Atlanta and Subdividing is not inherently bad, but there is a lot of moving parts (even on smaller projects). With 13 lots I would probably start with a survey, site plan, and grading plan. Then start working county/city to get their feedback. Depending on jurisdiction this can be informal process, or an official round table session of sorts. Keep an eye out for any neighborhood groups with lots of power, they can be ...... interesting.

Once a grading plan is available, and you know where utilities are, you will be able to start working on zeroing in on costs.

I would call a few local builders, and see what price point padded lots would interest them at. Hopefully you get some consistency. At only 13 lots, the nationals will likely want nothing to do with it.

The cheaper and less riskier alternative would be to turn key the design, zoning, and permitting phase of the project. Builders like buying at this phase because the red tape is out of the way, and they can save a couple bucks by hiring the infrastructure contractors directly. Obviously there would generally be less profit for you, but a fraction of the risk.

According to my last couple conversations with lenders, I would anticipate needing 40-50% of the project cost in cash. 

ps. Do not show the project to government, builders, etc until it is firmly under contract. If you want to talk to them about it, be generic in its location.