The value of land for residential development is related to income and expense. This means that what the land is worth is determined by the following factors: (a) how the parcel can be used; (b) the number of lots; (c) the potential sale (resale) value of the finished product; and (d) the expense necessary to transform the property into something that you can sell for a profit.The items included in the last factor (d) might consist of vertical and horizontal improvements, consultant fees (e.g., legal or engineering), and other expenses, such as municipal fees. It all depends on what your intended development scenario is. So, for instance, if you want to change the land parcel (developing it) only by obtaining zoning approvals, your category (d) would probably include municipal and consultant fees but not costs for installing improvements. On the other hand, if you are subdividing the parcel and then putting in the horizontal improvements (e.g., excavation, grading, landscaping, streets, curbs, sidewalks) in order to sell vacant building lots, your expenses would have to reflect the cost of those improvements in addition to the other expenses you incurred. If you intended to subdivide, put in site improvements, construct houses on… Read full this story
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