How do I calculate future potential?

[Kris Benson]

Happy Holidays!

How do we create a value of future potential of a property? This numbers below are for a 12 unit for sale in upstate NY.

Based on rent roll 2% rule means we should look at a purchase price of around $400K. Obviously the value here is in the future development of the land....Just curious how you go about evaluating potential.

The property is zoned planned development. The asking price is $900,000 and the owner will accept offers. It consists of 3 buildings on a 43 acre site with four 1386 sq ft, 2 bed 1 bath units in each building. It consistently runs at 100% occupancy but has had one unit vacant for the past 2 months. The property is approved for 2 additional buildings but approvals for additional buildings could be sought.

The financials for 2012 are as follows:
Rental income: $96,270
Advertising: $222
Cleaning and Maint: $3,163
Commissions: $1,898
Insurance: $5,469
Legal fees: $60
Mgt. fees: $2,230
Repairs: $5,937
Supplies: $4,017
Taxes: $19,340
Utilities: $7,170