Sell Your Lot Or Land
Sell your lot, or build and sell. Either way I can help.
Sell Your Lot or Land
I don’t want to be a Debbie-downer, but if you own a .25 to 1.25 acre lot that is zoned for a single family residence (SFR), it’s not likely that your lot will appreciate in value as much as you would hope. Why? The State of California, the county and the city are driving up the cost of construction. As the cost of construction goes up, the value of the land may go down or stay flat. This is really important for lot owners who are holding property with the hopes that the value will appreciate over time. Now, while most real estate does appreciate over time, SFR lots are not appreciating as much as real property. If you own a lot or land that is zoned for a single family residence here are some options:
Options On Selling Your Land or Lot:
A general rule of thumb is that the SFR lot is valued at 1/3rd the price of the homes in the area. As home prices go up, so will the value of the land. However, keep in mind that as the cost of construction goes up, the value of the land may not go up as quickly.
2. 1031 Exchange
You can cash out the lot or land and use the money to reinvest in other real estate opportunities such as rentals, multi-family, rehab properties or commercial. This might be a better use of your real estate investment and there are tax advantages for using a 1031 Exchange.
3. Build & Sell
This is a good option for sellers who are looking to maximize the value of the property, however it can be a daunting task. I work with a builder and entitlement expert who can help you navigate the permitting process. You could also use the land to finance the construction costs.
4. Bring in a Partner
Many land and lot owners have done the research to maximize the value but lack the means to complete the project. By bringing in an experienced partner you add experience, inject cash and share the risk.
Can the property be re-zoned? If this is an option it might be the best way to maximize the value. For example, if the SFR property is near multi-family homes (duplexes, triplexes and fourplexes) then the city or county may allow you to rezone the property. There are also infill PUD projects that appeal to the city and are in high demand for seniors and renters. In addition, there are some lots in Fresno County, particularly Old Fig, that allow you to build a second residence without re-zoning the property. However, the rezoning process can take many months, if not years.