Development costs for feasibility analysis of building land

  • Erstellt am 2020-06-28 12:26:50

Londonderry80

2020-06-28 12:26:50
  • #1
Hello dear forum,

I registered here because after days of extensive research on the internet, I could not find any meaningful information on this topic.

A good family friend, already retired, hinted after inquiry about a building plot that he could imagine selling his building land exclusively to me and not to any developer or the municipality, but only as a whole area of about 6000 m2.

I am only interested in one plot to build a single-family house on, with a size of about 700 m2 of land.

For this, I have been looking for answers to the following questions:


    [*]What costs can I expect for planning the development?
    [*]What costs can I expect for the development itself? (Road construction, approx. 100 meters long road)
    [*]What offer can I make the owner as a maximum price per m2?
    [*]Can the division of the plots be done individually?
    [*]Is it even possible to manage this independently?



    [*]The plot is located in Lower Saxony and borders on a fully developed street. "Within development plan"
    [*]The standard land value is 120€/m2.
    [*]Selling price for developed building land per m2 is easily 160€
    [*]The plot lies at the edge of a settlement.
    [*]A drawing is attached. (20 years old, comes from the municipality)
    [*]Equity capital is available to finance a large part of the estimated investment myself.
    [*]Area for the road including roundabout 16 meters diameter approx. 1000 m2

I ask for understanding, as I am aware of the risk of complete failure due to lack of experience.
However, I am driven by the thought of acquiring a rare plot to finally realize my dream of owning property.

Therefore, I would like to gauge here among the extraordinarily experienced members of the forum whether I should get involved and possibly hire a professional or better leave it alone.

Thank you very much in advance!
 

nordanney

2020-06-28 13:42:33
  • #2
Before I address your question, I ask for some information. Is the area actually designated as building land with a development plan? So no development plan procedure necessary? Perhaps additionally the question, why do you want to put yourself through the stress? You yourself say that you have enormous assets and could finance the measure mostly from equity. In that case, I would simply trade the plot. Big money is not to be made here, that's done with the construction of the houses.
 

Londonderry80

2020-06-28 15:47:33
  • #3
Thank you for the quick response, there is a development plan for the property. The photo I attached comes from this plan.

Yes, negotiating is also an option, but I want to check all directions beforehand.
 

nordanney

2020-06-28 15:51:50
  • #4
... otherwise you have to calculate with seven figures and you also have to be aware that it is very likely that no bank will grant you a loan and you will have to pay entirely in advance.
 

Londonderry80

2020-06-28 16:09:38
  • #5
ok, I did not expect that. My estimate for about 100 meters of road including water supply, sewage, electricity, gas is a maximum of 300,000 euros.
 

nordanney

2020-06-28 17:25:50
  • #6
Well, you start with the purchase of the plot of land and pay how many € for it? Surely you don’t get it for free. Let’s say €100 per sqm and the first €600,000 are already gone. Then you still need surveyors, planners, insurance, sales for the plots, soil surveys, etc. Remember that you only have cash inflows when the development is completely finished. By that I mean building-ready and surveyed plots. The finished road = asphalt or paving comes afterwards. Please also think of parking bays, street lamps, etc. So you will also have to plan significant construction period interest for the next few years, because the sale of the plots doesn’t just happen smoothly and easily. Oh yes, also plan for taxes on what is left as profit in the end. If you sell the building plots individually, it still looks like a commercial activity, so also trade tax. Just a few bullet points. I once read somewhere that (when the municipality builds) in NRW around €11-12k per running meter of road is assumed (all in).
 

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