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Land Lease Community & Sub-Division Gorham ME

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.

Keller Williams Realty - Portland
(207) 400-7007
50 Sewall Street
Portland, ME
Office Hours
9:00-5:00pm

Legacy Property Sotheby's Intl
(207) 780-8900
2 City Center
Portland, ME

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Patrick Cooper Realtor
(207) 838-9009
1231 Shore Rd
Cape Elizabeth, ME
 
Anne Worth Realty
(207) 247-2001
342 Main St
Waterboro, ME

Data Provided by:
Era Webb Assoc
(207) 623-4182
10 Mulliken Ct
Augusta, ME

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Home Sellers
(207) 774-5766
118 Maine Mall Rd Ste 2
South Portland, ME

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Seaglass Home Staging
(207) 229-7724
14 plymouth drive
saco, ME
 
REMAX/Allied RE
(207) 781-3063
4 Carriage Road
Cumberland Foreside, ME
 
Anne Plummer & Associates
(207) 693-5200
18 Olde Village West
Naples, ME
 
Mallett Real Estate Agency
(207) 564-3156
80 Lincoln St
Dover Foxcroft, ME

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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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