ᐅ Development costs for economic feasibility analysis of building land
Created on: 28 Jun 2020 12:26
L
Londonderry80
Hello dear forum,
I registered here because, after days of extensive online research, I was unable to find any clear information on this topic.
A good family friend, who is already retired, hinted after inquiry that he could imagine selling his building land exclusively to me and not to a developer or the municipality, but only as a whole plot of about 6000m2 (65000 sq ft).
I am only interested in a plot of land to build a single-family house with a size of about 700m2 (7500 sq ft).
For this, I have been looking for answers to the following questions:
I kindly ask for understanding, as I am aware that, due to lack of experience, I might face major setbacks. However, the thought of acquiring a rare piece of land and finally fulfilling my dream of owning property motivates me.
Therefore, I would like to explore with the exceptionally experienced members of this forum whether I should proceed and possibly hire a professional or if I would be better off avoiding this altogether.
Thank you very much in advance!
I registered here because, after days of extensive online research, I was unable to find any clear information on this topic.
A good family friend, who is already retired, hinted after inquiry that he could imagine selling his building land exclusively to me and not to a developer or the municipality, but only as a whole plot of about 6000m2 (65000 sq ft).
I am only interested in a plot of land to build a single-family house with a size of about 700m2 (7500 sq ft).
For this, I have been looking for answers to the following questions:
- What costs can I expect for planning the utility connections?
- What costs can I expect for the utility connections themselves? (Road construction of about 100 meters (330 feet) length)
- What is the maximum price per m2 I can offer the owner?
- Is it possible to subdivide the plot individually?
- Is it feasible to manage this independently at all?
- The plot is located in Lower Saxony and borders a fully developed road. "Within the development plan"
- The standard land value is 120€/m2 (approximately 11 USD/sq ft).
- The selling price for developed building land per m2 is easily 160€ (approximately 15 USD/sq ft).
- The plot is located at the edge of a settlement.
- A drawing is attached. (20 years old, provided by the municipality)
- Equity is available to finance a large part of the estimated investment myself.
- Area for the road including a roundabout, diameter 16 meters (52 feet), about 1000m2 (10760 sq ft)
I kindly ask for understanding, as I am aware that, due to lack of experience, I might face major setbacks. However, the thought of acquiring a rare piece of land and finally fulfilling my dream of owning property motivates me.
Therefore, I would like to explore with the exceptionally experienced members of this forum whether I should proceed and possibly hire a professional or if I would be better off avoiding this altogether.
Thank you very much in advance!
L
Londonderry8028 Jun 2020 20:15First of all, a very impressive analysis, and almost accurate as presented, despite my lack of information.
I reviewed the zoning plan again; it was created in 1980 and no longer corresponds to current data.
I don’t have the latest plan but attached a picture from the land-use planning. The yellow-marked area is approximately 6000 m2 (64,583 sq ft).
There was no conflict with the municipality; the seller simply does not rely on the money, being of advanced age, and would only sell due to the good relationship with my father.
I had not yet considered the municipality’s preemptive right to purchase.
However, I do not see why any of the following reasons should apply:
But gradually, the disappointment grows. While I did not expect it to be easy, it seems there are quite a few hurdles to overcome here.
Thank you very much; I have already learned a lot from the last five posts and am surprised by how much expertise has come together here.
- The building land has been subject to several land consolidations, but currently no procedure is ongoing. "Similar to what Escroda suspected"
- As far as I know, the seller is not involved.
- The area also includes the planned road shown, approximately 1000 m2 (10,764 sq ft).
- The road is listed in the legend as (traffic areas/road traffic areas).
I reviewed the zoning plan again; it was created in 1980 and no longer corresponds to current data.
I don’t have the latest plan but attached a picture from the land-use planning. The yellow-marked area is approximately 6000 m2 (64,583 sq ft).
There was no conflict with the municipality; the seller simply does not rely on the money, being of advanced age, and would only sell due to the good relationship with my father.
I had not yet considered the municipality’s preemptive right to purchase.
However, I do not see why any of the following reasons should apply:
- If, within a valid zoning plan, areas are designated for public use or as compensation in accordance with § 1a paragraph 3 (compensation areas for environmental protection),
- In land consolidation areas (rearrangement of plots as part of a zoning plan reorganization),
- If a property is located in a redevelopment area or urban development zone,
- In the context of a statute governing implementation measures for urban renewal, as well as preservation statutes,
- If it concerns undeveloped land in an outer area according to the land-use plan marked as residential building land or residential area,
- If predominantly residential buildings may be built on undeveloped land in areas according to §§ 30, 33, or 34, and
- In areas that should not be developed in favor of preventive flood protection.
But gradually, the disappointment grows. While I did not expect it to be easy, it seems there are quite a few hurdles to overcome here.
Thank you very much; I have already learned a lot from the last five posts and am surprised by how much expertise has come together here.
Londonderry80 schrieb:
The building land has been re-designated several times I meant a procedure according to §§45ff of the Building Code. But you have confirmed my suspicion that this does not apply here.
Londonderry80 schrieb:
I looked at the development plan again; it was created in 1980 and no longer reflects current data today. That may apply to the cadastral basis, but if there is no repeal or redevelopment, the development plan should still be legally binding today.
Londonderry80 schrieb:
However, I don’t see why any of the following reasons would be applicable. If my assumption from the first sentence is correct, I can immediately think of two reasons:
Londonderry80 schrieb:
if areas within a valid development plan are designated for public purposes ... This applies to the public traffic area.
Londonderry80 schrieb:
if mainly residential buildings can be built on undeveloped plots in areas according to §§ 30, 33, or 34 This applies to the remaining areas: §30 = legally binding development plan, WA = general residential area
Londonderry80 schrieb:
But gradually I’m getting disillusioned; I didn’t expect it to be easy, but there are clearly some hurdles to overcome here. Talk to the decision-makers in your municipality. If there has been no dispute and building land is scarce, the solution approach would be §11 urban development contract, Building Code. Enforceable here under §124 Building Code. It would be good to have a lawyer among your acquaintances.
Well, I wouldn’t want to take on something like that.
As mentioned before, the route would be a “land development agreement” or “urban development contract.”
You plan, build, and pay for the road, (most likely) a stormwater infiltration system, wastewater, and utilities (only partially in this case).
This will roughly cost you at least one million.
Out of the 6000m² (64500 sq ft), the zoning plan roughly leaves 4000m² (43050 sq ft) for plots. This means you have to allocate at least €250 per m² (roughly $250 per 11 sq ft) to the land price, and that’s not including the cost of purchasing the land itself or taxes. You can continue calculating in Munich; in the rural areas of North Rhine-Westphalia, it’s not worth the effort.
As mentioned before, the route would be a “land development agreement” or “urban development contract.”
You plan, build, and pay for the road, (most likely) a stormwater infiltration system, wastewater, and utilities (only partially in this case).
This will roughly cost you at least one million.
Out of the 6000m² (64500 sq ft), the zoning plan roughly leaves 4000m² (43050 sq ft) for plots. This means you have to allocate at least €250 per m² (roughly $250 per 11 sq ft) to the land price, and that’s not including the cost of purchasing the land itself or taxes. You can continue calculating in Munich; in the rural areas of North Rhine-Westphalia, it’s not worth the effort.
First of all, regarding your two screenshots: neither is useful—the second one due to resolution, but both also show too small a section to understand the overall situation.
I assume that the mentioned 6000 m2 refers to the entire area shown in image 1, and that the planned road has not yet been excluded from this area, so it will likely still need to be transferred to the municipality, reducing the usable area. Therefore, let’s proceed assuming only 4500 to 4800 m2 remain, of which you only need 700 m2 for personal use and probably cannot afford to act as the “dealer” for the rest of the plot—especially since you are not a real estate agent or a land development company.
From the planned road shown, I deduce—though this should be verified—that the municipality already has a concrete idea of the design of the public traffic area; however, first, this area has not yet been officially marked off, and second, there is a lack of motivation on their part to carry out the development.
In my opinion, you should first urge the owner to negotiate with you not as an individual buyer but as the chairperson of a building cooperative. You should then establish this cooperative and negotiate with the municipality to have the cooperative hire a developer to carry out the infrastructure work. (I have encountered similar situations and can tell you with some confidence that the municipality will likely not take action for at least another ten years but will tell you that you are welcome to take care of it yourself. Unfortunately, only a few contractors—Mr. H., Mr. G., and Mr. W., who are considered trustworthy by the municipality—would be the options available, and you should avoid openly discussing any arrangements that imply favoritism.) So, the main point is that the limiting factor for infrastructure development is less your experience or capital and more the ability to navigate local informal power structures.
In my view, you first need a meeting with the family friend, then with other interested parties in plots from the “remaining” land. Potentially, this includes everyone in the area still looking for a building plot, especially those who might not qualify under local allocation schemes without your involvement. Finally, a simple calculation: I said 4500 to 4800 m2, minus your 700 m2 leaves 3800 to 4100 m2. It would be naïve to assume that all of them could or would afford 700 m2 each, so I estimate about ten to twelve interested parties. You should invite even more initially to account for those who drop out. Call for a founding meeting and explain to the other members that the cooperative needs you as chairperson in order for your friend to be willing to sell.
There you have it, my theory—now it’s time for you to put it into practice.
https://www.instagram.com/11antgmxde/
https://www.linkedin.com/company/bauen-jetzt/
Londonderry80 schrieb:
A good family friend, already retired, has indicated, after inquiry, that he could imagine selling his building land exclusively to me and not to a developer or the municipality, but only as a whole plot of approximately 6000 m2.
I am only interested in a plot to build a single-family house with a size of about 700 m2 of land.
I assume that the mentioned 6000 m2 refers to the entire area shown in image 1, and that the planned road has not yet been excluded from this area, so it will likely still need to be transferred to the municipality, reducing the usable area. Therefore, let’s proceed assuming only 4500 to 4800 m2 remain, of which you only need 700 m2 for personal use and probably cannot afford to act as the “dealer” for the rest of the plot—especially since you are not a real estate agent or a land development company.
From the planned road shown, I deduce—though this should be verified—that the municipality already has a concrete idea of the design of the public traffic area; however, first, this area has not yet been officially marked off, and second, there is a lack of motivation on their part to carry out the development.
In my opinion, you should first urge the owner to negotiate with you not as an individual buyer but as the chairperson of a building cooperative. You should then establish this cooperative and negotiate with the municipality to have the cooperative hire a developer to carry out the infrastructure work. (I have encountered similar situations and can tell you with some confidence that the municipality will likely not take action for at least another ten years but will tell you that you are welcome to take care of it yourself. Unfortunately, only a few contractors—Mr. H., Mr. G., and Mr. W., who are considered trustworthy by the municipality—would be the options available, and you should avoid openly discussing any arrangements that imply favoritism.) So, the main point is that the limiting factor for infrastructure development is less your experience or capital and more the ability to navigate local informal power structures.
In my view, you first need a meeting with the family friend, then with other interested parties in plots from the “remaining” land. Potentially, this includes everyone in the area still looking for a building plot, especially those who might not qualify under local allocation schemes without your involvement. Finally, a simple calculation: I said 4500 to 4800 m2, minus your 700 m2 leaves 3800 to 4100 m2. It would be naïve to assume that all of them could or would afford 700 m2 each, so I estimate about ten to twelve interested parties. You should invite even more initially to account for those who drop out. Call for a founding meeting and explain to the other members that the cooperative needs you as chairperson in order for your friend to be willing to sell.
There you have it, my theory—now it’s time for you to put it into practice.
https://www.instagram.com/11antgmxde/
https://www.linkedin.com/company/bauen-jetzt/
L
Londonderry8030 Jun 2020 18:21As a well-intentioned citizen, I have so far assumed that such matters proceed even without knowing the right person, but that is certainly an important point not to be overlooked.
However, if I were to make this widely known, the gentleman in question would probably not get a wink of sleep.
The bank advisor, on the other hand, was very enthusiastic about the idea and would provide me with the necessary liquid funds.
Apparently, the bank also offers a substitution service to carry out the site development. Maybe I’ll just have them prepare a quote, if only for comparison purposes.
I would also inquire with the local builder, who has already handled a similar project in the community.
However, if I were to make this widely known, the gentleman in question would probably not get a wink of sleep.
The bank advisor, on the other hand, was very enthusiastic about the idea and would provide me with the necessary liquid funds.
Apparently, the bank also offers a substitution service to carry out the site development. Maybe I’ll just have them prepare a quote, if only for comparison purposes.
I would also inquire with the local builder, who has already handled a similar project in the community.
Londonderry80 schrieb:
However, the bank advisor was very enthusiastic about the idea and said they would provide me with the necessary liquid funds. a) On what contractual basis?
b) What exactly did you tell them?
c) What exactly did they understand?
https://www.instagram.com/11antgmxde/
https://www.linkedin.com/company/bauen-jetzt/
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