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! It is time-consuming to sort through all the parcels to find those that are worth considering. Buyers need tools to help them quickly eliminate the junk and select the parcels which deserve further consideration. So buyers typically use rules of thumb and formulas for their preliminary screening.
These are rough guidelines that are intended to help land buyers determine the "right price" to pay for a piece of property. The price at which these numbers work allows land buyers to determine within minutes whether the seller's request 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
It is not surprising that the method for estimating the site yield and the cost of improvement differs for residential and non-residential developments. The yield of a retail or office lot is the maximum amount of building space that could be constructed. This is usually a factor of the amount of parking space that will fit in the parcel. You can use a simple rule to estimate the area required for each parking space and drive aisle on your office property. Another would approximate the amount of land area taken up by sidewalks and walkways. A third rule of thumb might assume that the cost for vertical and horizontal improvements would be $100/sq. ft.
Residential Land Developments
The rule of thumb that is applied to residential Dirt Work near me land development will be to estimate both the cost and number of building parcels the parcel would produce when the subdivision has been completed. The "raw" value of each building lot is calculated using the estimated sale price of the house on the lot and the cost of improvements.
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. The rule of thumb calculation might look something like this, for example, for a vacant 15-acre parcel zoned 20,000 square feet. 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. In the second stage, 30% of gross site area is deducted for waste, natural constraints such as slopes, flooding, and irregular shapes, plus land that will be used by new roads.
Keep in mind that the rules of thumb may vary depending on your geographic location. The rough figures are estimates and should be modified as needed. The 30% deduction from the gross site area would not be appropriate if there was a large part of the 15-acre parcel in floodplain. If you're not sure what rule of thumb to use, be conservative.