Yossi Golan # Post 2
** Acquisition of land in the USA **
You decided you were tired of flipping!
And what is the reason? Murphy.
Murphy visited you a little more than you thought.
The wall that you decided to remove during the renovation, in order to open up the space in the center of the house, actually concentrated all the electricity and air conditioning infrastructure inside.
And so they evaporated a few thousand dollars more and a good reason for the subcontractors to explain why they are not on time.
And the excel is already starting to wave a red flag.
And so in every project new “surprises” like mushrooms come up after the rain and most of them how to say gently? Not really for the better.
You have decided “so far”! You are going on new construction projects.
And you started looking for land. Wonderful.
And you even found land. overpowering.
Have you checked COMPS as written in the books? Excellent.
Have you analyzed the prices of houses in the neighborhood? Stunning.
But now let's start checking out what's really about to be purchased - the land.
But what do you check?
At the flips we sent contractors for an estimate of the cost of renovation, we sent an inspector to check foundations, roof, windows, air conditioner, electricity, water, compliance with required codes, mold etc.
But in the case of land - there is nothing of everything we are used to checking… .. it's land, it's land.
What is being checked here anyway?
You start to realize that the test is a little different, actually…. Much different.
Need to sign a purchase contract. But this is land. Is it even necessary to include a review period in the contract? Due diligence?
The answer - of course yes!
What exactly is being examined in this period?
** To facilitate the process, I have prepared a CHECK LIST of 24 issues that need to be examined and I have even added the terms in English in important places so that the other side will understand the issue accurately. **
The answers will help you answer the question - is it even possible to build on this land? And as far as construction is possible - is it economical and profitable to build on this land?
So let's start…
**1. Is the land buildable? **
This is the first question, and even though it sounds silly - this is the most important question.
The land may not be buildable.
In such a case it is necessary to understand what the costs are for turning it into a construction bar and what is the length of time required for this.
** 2. Is the area developed? **
Undeveloped space will incur many expenses and a long period of time both in issuing permits and in preparing the land.
It is important to examine all the costs of preparing the land until it is ready for construction.
It is advisable to test using a proposal from several contractors to prepare the land for construction up to Pad Ready (and calculate on your own, once you have developed capabilities for this). ** Land development costs can turn a good deal into a hole in your pocket. **
** 3. Existence of infrastructure **
Are the required infrastructures in the area, including gas, sewage, water and electricity?
If the infrastructure is not available - the costs involved must be taken into account as well as the processes with the various supply companies, which means - time and budget.
** 4. Infrastructure constraints **
Check above and below the surface. Are you moving or are planning to move infrastructure that will impair your ability to build a house as you wish, if at all you are allowed to carry out construction.
** 5. Is there an infrastructure filler in the area? ** (It can cost up to $ 15,000)
** 6. Sewage infrastructure type - Sewer line or Septic **
A substantive question. We will return to it again at the end of the post.
If the infrastructure is Sewer - there is a set of issues to examine, for example: Is it necessary to install a pump to raise the sewer to road level if the ground is sloping?
If the Septic infrastructure - the most important question - does the soil allow liquids to be absorbed?
Sometimes the soil does not allow for the absorption of liquids and then construction will simply not be allowed on this soil.
The required test is called a Perc Test and costs about $ 500.
** 7. topography **
Even if the land is developed and all the infrastructure is in place - should preparatory work be done before foundations? Is special development and preparation work required?
Here is a case we experienced - about two years ago we considered buying land in Chattanooga, Tennessee to build a new house in a luxury neighborhood with an amazing view and schools with a score of 10. The price of land about $ 50,000 was definitely reasonable for the area and even 20% cheaper than the market value.