Moral decision, anyone here familiar with sub dividing land lots?

[ImcLoud]

Moral dilemma ------OK, so I have been home A LOT these last few weeks and started cleaning up a lot of paperwork I have been neglecting, one item sitting on my desk is an offer to buy a piece of property from me... I bought the property a while back and subbed it into 4 lots, 1 of which I sold rite away to another builder {a friend of mine who had a build to suite sold in that area, he didn't want to bid against me on the whole lot so I said I would sell him a lot after it was sub divided...}, I built houses on 2 and sold them both...

The last lot is the largest, its property goes behind the other lots and has a buildable lot in the front of it, so it is L shaped, this is common to cut land up like this so you can sell nice square minimum sized lots, so when you sub divide a big piece of property, you frontage dictates how many lots you can get {unless your putting in streets and I did that once, and NEVER gain}, so in this area the minimum frontage for a buildable lot was 300 ft and 3 acres total, so I bought the land when it was a single lot it had 1300 ft frontage and almost 20 acres, but the land furthest from the street was very wet, so I cut that out of the lots, and made 3 very nice square 3 acre lots plus the one L shaped 9+ acres lot which is buildable but has no house on it, its has been cleared and perked, ect ready to build but no one in their rite mind would build rite now when you can buy foreclosed for under $100 per sq foot...

So anyway, I have this big lot that stretches behind the others, there is another 10 acres behind this property with no street access {it wasn't landlocked when I bought my piece, but the original owner built a house behind me and lost it to the bank, but he still owns 10 acres between that foreclosed house and my land, useless because there is no way to get to it, he has a 12ft, dirt road access, and that is all the frontage he has, so it is good for waking around, that is it...

Here is the moral dilemma, the people I sold houses to in this area, obviously don't want a development in their back yard, and I am sure like looking out their back window and seeing trees not other houses looking back at them...
I have an offer for my land, as part of a 3 way deal.. How it works is, a company {fellow builder/developer, I don't personally know} wants to buy my lot and the 10 acre useless lot as well as that foreclosed house on 6.75 acres {would make 2 buildables but there isnt enough frontage total for 2}... The issue is, I know what their plan is, they play to cut that 12 foot dirt road open and put a street in, sub that foreclosed house into a 3 acre lot, get another lot out of the other 3 acres there, take the front 3 acres of my lot and sub it into another house lot on my street, then use the wet lands behind the houses I built as area to make up the lots on their new street... Very smart move on their part, they can buy the foreclosed house and land locked land for VERY VERY cheap money, they can end up with around 8 lots one with a house already on it for short money if I take their offer, they fix up that existing house {its only 4 years old} and sell it for $350K and have the other 7 lots for almost free!!! {KEEP IN MIND I SOLD THE SINGLE LOT TO MY BUILDER FRIEND FOR $100K years ago}...

So here are my options...
1- don't take the offer tell them its not for sale {which I have done 3 times and he offer is now worth seriously considering. They started at $60K for the entire 9+ acres, now they are up to $227K or letting me keep the buildable 3 acre with frontage on my street, and just buying the remaining wet 6 acres behind it all for $177K, so I keep a buildable lot which is only worth around $100K at 9 acres and still worth $75 at 3 acres plus get $177K {I will pay cap gains on that for sure, so uncle sam will get his almost 40% of the 177K}.

or

2-sell it and forget about the people that is will screw, who I have ran this by and really don't want me to sell, BUT don't have the money to buy the land either, not even if I discount it...

{Of course I could also just buy the foreclosed lot and the 10 acres and do it all my self, lol, but I am not in the mood for that much work, I hate putting streets in, stress like you could not imagine...}

So its a hard choice, if I don't sell it I still screw the guy that owns the 10 land locked acres, he has had some bad luck, I don't personally know him, but he seems decent... If I sell, the people I built houses for {these were build to suites so I spent a lot of time with these people, if you ever were involved in having a house built for you, you know what I mean...} will lose home value and will have back yard neighbors instead of a nice straight tree line...

I know very well I will NEVER get this much for this land in my lifetime, I most likely wont build a house on it either, its not on the market but I would like to sell it, the taxes and insurance are only $390 a year {street side is fenced with no gate so insurance is cheap and its a blank lot so taxes are cheap}....

SO WHAT DO I DO, I don't want to keep this builder and the other land owner up in the air...


Here is a drawing of what is there, the black is what exists now, the red is where I think they will put a street and the blue is all the lots they will end up with...

 

[Steve81]

I don't really see it as screwing the other people. There was no promise made or implied that you would hold on to this other land into perpetuity, ensuring that these folks would have a beautiful treeline to look at instead of more houses. If I were in the other people's shoes, I could certainly understand the decision.

 

[Adam]

You should sell the land to Walmart.

 

[its phillip]

lol Adam

Sell it and use the money to replace my A/C >_>

 

[markw]

I agree with Steve. You're not "screwing" anyone. There was no guarantee that the view would last forever. If they really, really want to preserve their view offer to sell them the land for what you can get for it at market price.

That you are considering them in your decision speaks well of you.

 

[ImcLoud]

Thanks guys... I feel like I owe my customers future consideration and I am fortunate enough to afford to let that weigh my decisions.

I called the investing companies real estate agent and she gave me direct contact info for the company owner, I spoke with him this morning and he is going to have his project coordinator call me to set up a meeting at my home on Saturday, I am going to give the 2 families I sold my houses to the opportunity to be present for the meeting. This way they can see what is planned and how it will effect them... How this meeting goes will dictate which way I decide to go.. I will either sell it all or not at all...

I have walked that property and spent the better part of a year in and out of there when we were clearing it and building the 2 houses, so I know it well, I think they are going to do something similar to what I did, 3 acres lots Cleared FLAT, then plant new landscape trees... They wont leave a tree line like is there now, I didn't leave one so once they cut their trees there will be non left between the homes... Some people think it looks messy, unkept pines, oaks, white birch but they put a priceless sound and visual barrier, and when I spoke to the home owners they felt the same way with out me mentioning it...

I am going to call both families tonight after 6 and see if they want to come for the meeting, I feel bad just asking, but I still have to be a business man, I guess, and with out this deal I will never get this kind of money for that land...

 

[Steve81]

Some people think it looks messy, unkept pines, oaks, white birch but they put a priceless sound and visual barrier, and when I spoke to the home owners they felt the same way with out me mentioning it...

One question: how close are these two houses to the land you're looking to sell? Obviously three acres is a fair amount of space to work with, so if the homes are located towards the road, or even centrally located on the lot, that's a lot of potential space to plant their own trees, erect a fence, etc.

 

[ImcLoud]

One question: how close are these two houses to the land you're looking to sell? Obviously three acres is a fair amount of space to work with, so if the homes are located towards the road, or even centrally located on the lot, that's a lot of potential space to plant their own trees, erect a fence, etc.

When I built these houses I was thinking the land around them will never be touched, the land I bought was bordered by protected water shed and the rear piece.. So I clear cut it, it dips from the street so from the street you can not see the houses, front doors are far from the street putting the back doors 30 ft from the rear property line... So you drive down hill to the house, I did buried electric services, they have well water and septic systems so they are pretty basic well in the front septic in the back, houses are built in the center of the land left to right but set to the rear front to back...

I got really good money for the wood on this land. Between the wood, gravel, and stone walls I sold off the original 20 acre lot the lot stood me $0 just my labor in clearing it all... I sold the first smallest stacked flat rock wall for $11K 3 days after I closed on the land, and there were 9 other walls there much larger!!!! Then the first buildable lot sold for enough to get the electric service, wells, septic, permits, foundations, basement floors, and garage floors done on the 2 houses I built.... So now I had a 9 acre lot and 2 - 3 acre lots with wells, electric, septics, and floored foundations all done for FREE {well not free, I had my machines there for a few months and did all the clearing and site work myself, the rest of it was subbed out}...

So this project in no way owes me anything, I didn't know either of the people I built for prior to the house sales... I did this a lot, clear the lot, get the permits, set everything up and then list them on mls for sale as "WILL BUILD TO SUIT" properties, so now the land brings $225K and I make 30-40% on building them a house... So for someone looking to build its a no brainer, clearing is done, permits are ready, foundation is there, wells, septic, electric all done, BUT the best part is NO CONSTRUCTION LOAN NEEDED, you can literally pick your design and be living in your house in 45 days, I collect 20% down and then they finance the entire thing when its done, a process you start on the day I start framing, once they got the house was done and their loan was ready they took the deposit they gave me and put it down on the mortgage, the mortgage company writes me a check and we all live happily ever after......
The first one sold with in a month, they picked a design very close to the one my friend built next door, 2700 sq ft, 4 bed, 2 1/2 bath, 3 car garage{I did both with 3 cars}, the second one sold while that one was being built, again similar except a little smaller 3 bed...

 

[crossedover]

WWWD? What would walmart do? .... couldn't resist lol

 

[Steve81]

When I built these houses I was thinking the land around them will never be touched, the land I bought was bordered by protected water shed and the rear piece.. So I clear cut it, it dips from the street so from the street you can not see the houses, front doors are far from the street putting the back doors 30 ft from the rear property line...

Well that's relatively close, but still enough space to have a few trees if you're so inclined. The other side of the equation is how far the buyer will build from the projected road. If I were the builder, I'd push it close to the road/away from the property line because most prospective buyers would prefer some space from their neighbors anyway. In either case, at least it's only a handful of lots vs 20-30 plus an apartment complex or two.

 

[ImcLoud]

Steve part of the issue is they are going to be building houses that cost much less than the houses i built, the market for $225K homes is much stronger than $400+K homes, so judging by what this company has built elsewhere these will be basic 1700 sq ft ranches or 2100 sq ft colonials, looking at what they have built recently shows me they like building 1 of 2 houses, they can't be blamed it is what is selling rite now... As far as placing the houses, in the lots abutting my property it is going to push them away from the houses because its wet back there. BUT, they are not protected wetlands, they are only wet because of low grade, so they can easily bring in a few thousand yards of fill and put a house where ever they want.. Normally with this style development they stagger the builds so they are not "kitchen window to kitchen window". As far as leaving trees behind I am sure they are going to do the same thing as me, if they leave anything it will be the few scattered pines in there, but nothing else...

BUT I can not really say until I see their plans. I spoke with his project manager and she emailed me a copy of the packets they send to their potential investors, companies like this don't play with their own money, they are much larger than I was, I built 2 houses at a time and did it twice a year at the most, these guys build 30 at a time 3 times a year!!! The investor template shows 6 units {looks like they plan on keeping the foreclosed house and lot next door to the houses I built separate from the development}, it shows a median price of $355 and an investment of $1.1m for a profit of over a million inside of 8 months... Not too shabby especially since the owner is probably going to bury the spare lot and foreclosed house in his pocket{maybe $300K}... So if you invest in this small project, it looks like $31,250 each share with a total of 40 shares, if they build and sell all the houses inside of a year you would get half of the profit back which essentially gets you around 1 and a half times your money, so $31K in $46K back in a year, NO PROMISES, but you figure the company doesn't make money unless they finish and sell them, so they will. I shouldn't say they don't make money, they take the investment and pay their payrolls and materials, and the owner and his wife are most likely pres and vp on the payroll earning decent wages....

ANYWAY - She definitely emailed me a bargaining chip, I haven't read it all through and there is no info on what and wear they are placing properties, this template doesn't even have an address, just says the town {they wouldn't want anyone cutting them out of the deal}, I could tell the owner didn't want to tell me much, he knows of my company and figures I hold the missing piece to his puzzle, and I know time is important because that foreclosed house is on the market and someone can come in buy it and he will be out before he gets in, if I were him I would have bought that first before negotiating with anyone, before anyone knew my plan, at least then I would have a soldier in the fight, then worse case, I fix that house and sell it for a profit, best case it all works out and I make a million dollars or in his case since he is using investors a half million dollars, I never used them just for that fact, they get half of what you make, NO THANKS, they really are not even taking a risk, they will be listed as lean holders and the land is never going to be worthless, although he is only including the 6 uncut lots in the deal, so keeping the house and other lot is a nice feature I am sure, but that is a lot of paper work just to come up with a million bucks, a company as large as them should have 40 times that in a line of credit somewhere, although I am sure they have a lot more going on all over the place...

I kind of want to invest in this thing after reading the packet, lol You figure take the money they are going to give me from my land give it back to them and in a year get another 50%.. Not too bad, lol... Thats more than I would make if I built a house on it..

 

[ImcLoud]

WWWD? What would walmart do? .... couldn't resist lol

very nice.. Walmart couldn't be bothered with a 25 acre development project, they would come in and build a waste transfer station on the land so all the property around it was worthless, then they would buy it all up cheap, take the waste management transfer station away and then build the plat and resell at a higher price, while holding the mrotgages at adjustable rates, and only selling to people that can not afford to live there, so they get to foreclose and resell in the future when the rates jump and the owners can't afford to live there anymore...

 

[cpd]

Even if the houses are lesser quality, I don't think you are doing anything wrong by selling the property. As others have said, you made no promises either way about what you would do with the land. You even offered to sell it to them, but they don't want to buy. They can have no reasonable expectation that you will sit on land you can benefit from just so they will have no backyard neighbors. In my book you are going well beyond any obligation you have by offering to them for less money, setting up the review meeting etc. But then again, I may have questionable morals.

I cannot stand NIMBY. Query -- are there other houses in the area that preexisted the ones you built who now look at the one's you built for these owners?

 

[ImcLoud]

I cannot stand NIMBY. Query -- are there other houses in the area that preexisted the ones you built who now look at the one's you built for these owners?

there are houses across the street I don't think you can see them from their houses, these are built on a degrading slope, so the houses are hard to see from the street... BUT I have built houses in line of sight to existing construction, lol, but never in their back yard... I try to do higher end buildings, so I go into an area, and try to build a house a little nicer thatn the nicest one there. Property values won't get hurt and people like buying the nicest house on the block, they will pay a premium for it BUT, they do not want the surrounding houses to be too far off the mark... You don't want to spend three quarters of a million dollars on a home and have to go outside and see your neighbors washing machines, TV's, car fenders, ect. from past years... I personally could care less, but I am in the woods, my neighbor has his grandfathers old broken down tractor sitting 3 feet off the street, but he is almost a half mile from me so its not a huge issue for me, I look out my windows and see trees, beyond them I couldn't care less..

 

[crossedover]

very nice.. Walmart couldn't be bothered with a 25 acre development project, they would come in and build a waste transfer station on the land so all the property around it was worthless, then they would buy it all up cheap, take the waste management transfer station away and then build the plat and resell at a higher price, while holding the mrotgages at adjustable rates, and only selling to people that can not afford to live there, so they get to foreclose and resell in the future when the rates jump and the owners can't afford to live there anymore...

it's only a joke, no thought provoking harm meant. Thought I'd lighten up the thread since it's in the steam vent. Sorry I'll rephrase.. wwtd? What would trump do..

 

[cpd]

When I look out my window, I see my neighbor's window 8 feet away. My 3 year old often screams out the window to my neighbor in her house, "Come to the Window, I want to show you something!" That might give you a hint at my perspective on NIMBY. Of course my neighbor may have a different perspective, lol.

 

[ImcLoud]

it's only a joke, no thought provoking harm meant. Thought I'd lighten up the thread since it's in the steam vent. Sorry I'll rephrase.. wwtd? What would trump do..

I know it was a joke, lol I just forget to put the smilees...

 

[TheWarrior]

Include a contingency for a landscaping budget to do cypresses or other ever green big bushy plants so that your houses don't even have to see them, and aren't pretentious by putting up a 12' fence.

 

[ImcLoud]

Include a contingency for a landscaping budget to do cypresses or other ever green big bushy plants so that your houses don't even have to see them, and aren't pretentious by putting up a 12' fence.

Good idea, but this is very hard to do, first the easy part is drawing it up and having the builder plant the trees, expensive {I would guess a tree line that long would cost over $100K } but easy to coordinate. Now what happens when the property sells, there is no way with out a lot of legal paperwork you could get someone to keep them trees their after they own it, not with out some type of neighborhood association all of which costs money... The fees we would have to pay for lawyers to draw up and then have the opposing lawyer double check would be prohibitive, never mind the cost of the trees, soil, and labor, plus upkeep, ect...

Leaving the tree line may or may not be an option depending how the land percs, location of ledge, their plans, ect...



ANYWAY, I spoke with the home owners and they want to come to the meeting, the other owner that I didn't build for also wants to be present, she called me this morning after the neighbor told her about it...

 

[crossedover]

Look at "screening" type trees that grow 1.5 to 2' annually. Purchase a semi mature and in 4/6 years it's filled out enough to start serving the purpose.