Curious about pricing of lots for new construction builds

[Christian Roberts]

I hear a lot of investors, realtors, and other real estate professionals saying that they are looking for vacant lots/land to build on. Genuinely curious what people's plans are for these lots, and why so many people are gravitating toward it seemingly all of a sudden. I have my thoughts on the exit strategies and possibilities, but I am very curious to hear what other people are hearing/saying about these opportunities in Chattanooga. 

- What are the exit strategies?

- What zoning is desirable? 

- Does it matter where they are located? In Chattanooga or surrounding areas of Chatt?

-Costs involved for cutting curbs and running sewer? 

- How to price these lots to ensure a good profit on the backend? 

Thanks in advance for any input! 

[Brian Levredge]

I can only speak for myself but have been building (specs) in Chattanooga for about ten years now.  

My primary exit strategy in building is to sell the house to an owner occupant.  I've been pretty successful doing that and have done so in different parts of town here over the years.  

Zoning desirablity would be R1.  I prefer infill where there are proven comps/neighborhoods.  As an aside the City of Chattanooga is changing its zoning rules in November so some things may change soon.

Yes.  Location matters.  Typically the higher the lot price the more expensive the house you must build to make the numbers work.  So in N Chatt a lot can easily run 150k-200k and you have to build a 1MM+ retail house to make it worth your while. But that's a smaller pool of buyers here.  You'll want to look in areas that have better regarded schools than others parts of town.  

Much that is outside the city limits is on septic.  So you need to make sure it percs if on septic.  Sewer is often at the curb so no need to cut the street and tie in.  But if you do that's 15-20k easy these days.  

A couple years ago, on a cost per ft basis, existing home sales started exceeding the cost to build new so that drives things.  Plus we get a lot of people moving here from out of market and when coming from Chicago, New York, or Los Angeles, it looks like everything is on sale here comparatively speaking.