DO YOU SEE A PROFIT TO BE MADE HERE?

[Karen Margrave]

Vacant land that is for sale in Orange County for residential housing is a rarity. There were two lots that had been split off of a larger lot, into 3 lots. The seller wanted to keep the middle lot. The neighborhood has homes in the $500-$675k range. We thought $200,000 per lot would be the max we could justify (still would need to pay all school fees, utility extensions, park fee of $10,000, permits, etc., PLUS all the other building and development costs) Some foreign investors made an offer for $585,000 for both lots, telling the seller they can close in 10 days and construct the house in 90 (right.... but I digress). Their intent is to build out two houses (2500 s.f. and 1800 s.f.) and sell them. I don't see how it's possible.

For all of you developers, new home builders, etc., based on a selling price of $675,000 - $750,000 what would you think is reasonable for lot costs (excluding permits, fees, etc.) ?