Cohousing-L Mailing List: Re: Figuring out what land price is appropriate for project size and expected unit price

[R Philip Dowds (rpdowds]

Experienced residential developers often have a pretty good grip on the 
cost-per-sq-ft estimate for typical residential construction.  Site costs are 
far more variable, and consist of two parts:
  — land acquisition cost; and
  — site development costs.
Land that is flat, clean and near utility services, properly zoned and 
unencumbered by easements, tends to be pretty expensive.  Two miles away, a 
similar amount of acreage is a lot cheaper — but it’s hilly, rocky, 
contaminated, zoned industrial, and has public utility lines strung across the 
back half.  The school district isn’t so good, either.  Per acre, this second 
rate site is “cheap” — but it will need a lot of investment, remediation, and 
special permits before it can be well used.  Part of the developer’s skill set 
includes the ability to overcome many site development obstacles.

So No, there isn’t a reliable rule of thumb for what you ought to pay for land. 
 Every project is different, and benefits from its own pro forma financial 
analysis — which in turn is often tied to some idea about dwelling units per 
acre confirmed by a simple site schematic.

Thanks,
Philip Dowds
Cornerstone Village Cohousing
Cambridge, MA

> On May 9, 2017, at 2:26 PM, leenaree [at] xmission.com wrote:
> 
> 
> 
> 
>  We are trying to determine a price range for land parcels for our group. 
> 
>  For example, Let’s say you are looking at a parcel in a neighborhood where  
> 3 bedroom, 1400 sq ft  townhomes are currently valued at $218,500, with land 
> valued about $69,000 (though 1 sold 2 months ago for $262,000).  You expect 
> to build 30 units evenly distributed between 1, 2 and 3 bedrooms, and want to 
> add features like solar panels on at least the common house.
> 
>  Is there any rule of thumb or formula for determining whether a parcel of 
> land is affordable for your group, given a desire to keep the home prices 
> comparable?
> 
>  Thanks
> 
>  Eileen McCabe, Tammany Commons, Snohomish County Washington
> 
> 
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