Don’t Overlook the Dirt.
With all the focus on existing homes, many buyers miss the opportunity that lot development provides.
The Hidden Opportunity
Most real estate marketing focuses exclusively on new and existing home sales. Because residential construction is viewed as “complex,” it is easy for buyers and small investors to overlook raw land.
But in a market with low inventory and aging housing stock, land is the ultimate inventory unlock.
The “New Build” Benchmark
Even if you aren’t sure you want to build, you should understand the math. Building new is the mechanism we use to compare existing sales.
If an existing 50-year-old home costs $450,000, but you can buy a lot and build brand new for $460,000, the existing home is likely overpriced. Understanding the cost of construction gives you a powerful lens to view the rest of the market.
The Cost Curve is Changing
The assumption that “building is too expensive” is being challenged by modern methods.
Manufactured & Modular
Improvements in manufactured construction are bringing down the cost and timeline of building. In many cases, these efficiencies make building new a viable financial alternative to rehabbing an old shell.
Predictable Quality
Unlike a renovation where you might find hidden rot behind the walls, new construction (especially factory-built) offers predictable costs and warranty-backed quality.
How a BPO Assesses Viability
Before you buy the land, we run a “New Construction Feasibility” check using the BPO framework.
1. Lot Valuation
We determine the fair market value of the raw land based on location, zoning potential, and site preparation needs.
2. End-Value (ARV)
What will the finished home sell for? We pull comps for new construction in the area to set the ceiling price.
3. The Spread
We do the math: (End Value) minus (Land Cost + Estimated Build Cost). Does the spread justify the effort?