Land buyers who are looking to buy land in order to "develop" (as this term is defined in these Land Development Values articles) it or build on it to sell the whole package (e.g. a home built on its lot), have to sort through many parcels, because everyone wants to sell them something! To identify parcels of land that are worthy of further investigation, it is a time-consuming process. Land buyers need tools that can help them quickly separate the junk from the good parcels. Buyers typically use formulas and rules of thumb for their initial screening.
These rules of thumb are designed to provide rough estimates relating to the yield of a site and different cost factors because these are the key aspects in calculating the "right" price they should pay for the land. By defining the price at which the numbers work, land buyers can see within minutes if the seller's asking price is realistic. If the land parcel is substantially overpriced, the buyers can simply discard the property and move on to better prospects.
Commercial Land Developments
The method used to estimate site yields and improvements costs for non-residential and residential land development is different. For office or retail parcels, yield is the total amount of space that can potentially be built. This is usually determined by the number and size of parking spaces on a parcel. Also, the total development limit imposed by the zoning law's impervious area and green space requirements will be taken into consideration. One rule of thumb might be used to estimate the total amount of land area needed for each car that would be parked on the office property (e.g., square feet for parking space plus drive aisle). A second rule would estimate the area of land taken up by the sidewalks and pathways. The third rule is to assume that improvements vertically and horizontally will cost $100/sq. ft. of office space.
Residential Land Developments
To estimate the number of lots that a parcel of land could produce, once the subdivision was completed, as well as the cost for horizontal improvement. The value of each "raw" building lot would be calculated based on the projected sale value of the finished product (house on its lot) and the improvement costs.
One rule of thumb for site yield might take the gross land area, subtract all the square feet that are wasted or can't be utilized due to whatever reason. Divide the result by minimum lot sizes required by zoning and you will get the number of parcels. As an example, a 15-acre vacant parcel zoned at 20,000 sq.ft. might be calculated as follows. ft. lots:
Step 1: 43,560 sq. ft. x 15 acres = 653,400 sq. ft.
Step 2: 653,400 sq. ft. x 70% = 457,380 sq. ft.
Step 3: 457,380 sq. ft. divided by 20,000 sq. ft. = 22.87 building lots
This would mean that there are roughly 22 lots of land for this parcel. The second step involves subtracting 30% from the gross site to account of wastage and square feet lost due to natural constraints, such as slopes or floodplains.
You should be aware that there are different rules for each area. They are rough estimates so you should modify them as circumstances warrant Land Clearing near me and not just apply them blindly. If a substantial portion of the 15 acre parcel was in floodplain, it wouldn't make any sense to deduct only 30% from the total gross site area. Be conservative if you don't know what rule to use.