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Land Lease Community & Sub-Division Belen NM

Whether you should build a land lease community or a sub-division depends on several factors: your investment objectives, cash & credit resources, market conditions, target buyer demographics, etc. Read on for an in-depth answer to this question.

Re/Max Gallery
(505) 866-2500
1052 MainstreetSte B
Los Lunas, NM
 
Re/Max Signature
(505) 836-1000
3322 Coors BlvdSte 8
Albuquerque, NM
 
Re/Max Western Heritage
(505) 281-4445
1917 NM Hwy 333Ste E
Edgewood, NM
 
Re/Max Elite
(505) 798-1000
8300 Carmel Ave NESte 201
Albuquerque, NM
 
Re/Max Finest
(505) 792-2255
5101 Coors Blvd NW Ste C
Albuquerque, NM
 
Amigo Realty
(505) 865-1500
3415 Hwy 47
Los Lunas, NM

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Re/Max Classic Realty
(575) 524-8788
2805 Doral Ct
Las Cruces, NM
 
Re/Max Green Mountain Real Estate
(575) 682-2537
500 Burro Ave
Cloudcroft, NM
 
Re/Max Professionals Plus
(575) 756-1678
2321 Hwy 17PO Box 1125
Chama, NM
 
Re/Max Alliance
(505) 298-9999
9577 Osuna NE Suite B
Albuquerque, NM
 
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Building a Land Lease Community vs a Sub-Division

Building a land lease community vs a sub-division
Wed 03/19/08 09:45:12 pm
by Ed Hicks

I am an experienced boulevard retailer, however due to a shortage of homesites in my market area, my sales have slowed somewhat. With an impending recession and an expected relatively high demand for affordable housing, I have decided to become a developer, but I am not sure what kind of community to build. What are the advantages and disadvantages of building a land lease community vs a sub-division? Beth T., Lima, OH

The answers depend on several factors: your investment objectives, cash & credit resources, market conditions, target buyer demographics, etc. If you have limited cash and credit, most retailers new to development will parcel off tracts of land into building lots, and sell them without improvements to buyers. Before a home is installed on a lot, however, the seller or buyer has to arrange for utilities. This usually means arranging for a well & septic tank. Finding land which has the proper zoning is usually allowed in more rural areas, and land use regulations may require relatively large lot sizes, often a 1 acre or more minimum size. By the way, offering lots for sale without improvements across state lines may be a violation of the Interstate Land Sales Act. See your attorney for relevant registration requirement. As the lots are sold off, the cash flow may be used to acquire more land, etc., sort of "bootstrapping" your way along while building up your cash reserves with each lot sale.

If you have more cash and credit, it is often best to build a small subdivision where the streets and utilities are provided to each homesite. Development costs are usually higher, and getting approvals may require zoning and site plan approvals which often involve hostile public hearings. Resulting lot sizes are usually smaller, with yields of 2.5 to 5.0 per acre depending on setbacks, street widths, etc. Advantages over the rural, large unimproved lots are: easier to sell, less rural areas, and the home/land package may be eligible for 30 year financing at site built home rates ...

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