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Tuesday, February 12 2013
The Vacant Land Conundrum


Owning a Vacant Lot is a great strategy for getting your toe in the water in a community you think you may want to live in the future, as well as a way to diversify an investment portfolio with Real Estate.  It is relatively inexpensive to own (Real Estate Taxes) and relatively easy to maintain, perhaps clearing or mowing it periodically. 
The challenge comes when you have decided that you aren’t going to build on it yourself and you wish to divest yourself of the investment in return for cash.  The market for Vacant Land is a bit fickle.  If the overall real estate market is experiencing reduced prices as we have been for the past several years, selling that lot can be tough. 
When the prices of existing houses, on perhaps preferred lots is low, it makes the “buy the land and build on it” model a tough one from a financial perspective.  Basically we are looking at the price of the land plus the cost to build and needing to be less than or roughly equal to the purchase price of an existing home plus any updates or remodeling.  The formulaic side of me can’t help but state it as:

VL + CB  < or = EH + RM

VL - Vacant Land; CB - Cost to Build;
EH - Existing House; RM - Remodel

This of course doesn’t take in the entire story either. Clearly the ability to design your living space and to take advantage of current technology and building practices has a benefit.  While, at the same time, not all folks are interested in the occasional hassles of the building process, particularly from hundreds of miles away. 
 
Therein lies the conundrum. What is the actual value of a piece of Vacant Land? The variables are great and the comparisons of one piece of land to another is sometimes a difficult one.  The value ultimately is in the eyes of the beholder.

If finding your dream property and building a home sounds like something you are interested in, check out my homesite listings!
Located in Beachview
Located in Sea Oats
Located in the Sanctuary
For information on ALL the Sanibel and Captiva Island real estate, give me a call at 239-691-4915 or through my Contact Form!
Thanks
Sarah
Posted by: AT 09:05 am   |  Permalink   |  Email


Servicing the Real Estate Needs of Buyers and Sellers on Sanibel and Captiva Islands.

 
ReMax of the Islands Sarah Ashton
Sarah Ashton Sarah S. Ashton, Broker Associate, Realtor®
ReMax of the Islands
2400 Palm Ridge Road
Sanibel, FL 33957

 

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