Property Owner FAQ's

Q: I had my land for sale but it never sold, what should I do now?

A: The first thing to determine is why it didn’t sell. For the real estate and development industry, the recent period has been tumultuous, so, you need to analyze the local market to determine, if this is a problem with the overall market, your local area, or your individual parcel. A careful market analysis should give you the answers you need.

If you determine that the problem is with your land parcel, then try and understand why. Is the parcel well located? Are their significant environmental issues to overcome before it can be developed? How difficult is it to develop? And finally, how is it priced versus other similar parcels? Real estate is no different from any other purchase, buyers are looking for the best value for their money. Does your parcel represent the best value over other similar land parcels?

Before re-marketing your property, if it hasn’t already been done, consider some preliminary work to demonstrate what could be developed on it. This could take the form of a zoning study to determine the major constraints in developing your property. Providing this for a buyer reduces their risk and can result in both a higher price and a shorter marketing time for your property. Inhabit’s Groundbreaker service will provide these answers for you.

Q: How much is my land worth?

A: The short answer, is, that depends. Many factors influence the value of any land parcel; location, size, zoning, environmental constraints and ultimately, demand.

In one sense, land is the raw material for any development project, new homes, a retail center or downtown office building. So, it’s value is ultimately a function of what can be built on it. As an example, a land parcel zoned for residential use in an area where homes are priced at $500K is more valuable than a similar parcel where homes sell for $350K.

The other major factor that determines value is the weather or not any governmental approvals have been issued for the parcel. The hurdle for getting the required governmental approvals is high. So, once a piece of land has these approvals, it's inherently worth more than raw land.

Also, with these approvals in place, a developer/builder knows exactly what can be built. In this way, the risk to the buyer is reduced, resulting in a higher price for the land parcel. So, even if you just want to sell your land, it usually makes sense to complete the preliminary approval process to determine what can be built on it. inhabit can help you navigate this process and get your land ready to list.

Q: What’s a JV?

A: Short hand for joint venture. Although a JV can take many forms, the goal is the same; form a project specific partnership to develop or improve property. This can take the form of a contractor and land-owner partnering to develop a piece of property. For instance, someone owns a parcel of land that they want to sell. But instead of selling it out-right to a builder/developer, the land owner and developer create an entity (usually a limited liability company or LLC) to develop the property.

The land owner contributes the land and the contractor contributed the expertise and funding to develop it. Once completed & sold, profits are divided according to a pre-determined formula. If done right, this is a classic win-win situation. The land owner gets more money for their property than they would from a sale, the contractor makes more profit since they don’t have to carry the cost of the land during construction. In the current A&D financing environment, JV’s can be a good solution for both land owners looking to sell and developers looking to build since they can provide the necessary equity to start a project.

The key to a successful JV is creatively structuring the agreement to provide both a platform for development, while protecting the interests of all parties. inhabit understands these issues and can help you structure a JV for your project.

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