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Land Lease Community & Sub-Division Gallup 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 Combined Investments
(505) 722-7811
1638 South 2nd St
Gallup, NM
Re/Max Elegance
(505) 287-7110
1120 W Santa Fe
Grants, NM
Re/Max Gallery
(505) 866-2500
1052 MainstreetSte B
Los Lunas, NM
Re/Max Silver Advantage
(575) 538-3847
314 E 14th StPO Box 1477
Silver City, NM
Re/Max Premiere Realtors
(505) 237-9750
3701 San Mateo Blvd NE
Albuquerque, NM
Re/Max Finest
(505) 792-2255
5101 Coors Blvd NW Ste C
Albuquerque, NM
Re/Max Of Alamogordo, Ltd.
(575) 437-0914
3410 N White Sands
Alamogordo, NM
Re/Max Of Farmington
(505) 327-4777
108 N Orchard AveSte 101
Farmington, NM
Re/Max First Place Realtors, Inc
(575) 763-3729
817 E Llano Estacado Blvd
Clovis, NM
Re/Max Professionals Plus
(575) 756-1678
2321 Hwy 17PO Box 1125
Chama, NM

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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