A family member has a plat of land that is going to be made into a subdivision. He asked me for any thoughts or concerns. I figured I would ask the sigforum brain trust, we have a ton of knowledge and experience here.

Details:
Located in North Texas
Minimum home price of $600k
Approximately 150 lots
Approximately 1/3 acre lots
Community 2 acre lake with trail system
Not great, but a very good school district
Custom builders

Questions:
What are the most important things you would be look for in a subdivision?

What are some instant dislikes in a subdivision?

Roundabouts or 4 way stops?

What separates ok subdivisions from great subdivisions?

HOA requests or dislikes?

Anything special with the road system?

Wood fencing or wrought iron fencing facing the trail system?

Would you live here? Why or why not?

Any other thoughts?

You lost me at 600k.

Lost me at 1/3 acre.

Wow, you are covering lots of ground here! I financed subdivisions for years as a commercial banker. In short, I found the amateurs lost there butt.

I don’t know your market but is $600,000 a realistic price point?

There are too many things to plan out.....water, sewer, lighting, roads, green spaces, overall design, number of phases, cash availability, covenants, marketing, pre-sales, builders agreements. The list goes on.

I would find a successful, experienced developer and partner.

Having done a little of this in Whackyland, if your family member is asking questions like that, maybe he should sell to to someone who knows what they are doing.

There are a great many technicalities, traffic flow, drainage, slopes, orientation of lots, layout of utilities and common areas, etc.

The value of this development can vary all over the place depending on how these issues and similar are dealt with, and it can be an expensive way to gain experience.

There are lawyers who specialize in planning common area documents, CC&Rs, corporate by laws, HOA financing, etc. Engineers need to address traffic, drainage, etc.

Just off of the top of my head:

A minimum home price of $600K suggests a lot price of $120K or higher. Are you really going to sell 1/3 acre lots for that much? Have you already subtracted how much land you'll need to put aside for streets and whatnot, since that isn't salable property? If you're looking at custom builders, is there a market for new, custom-built housing in the area or is it simpler to buy an existing house?

In response to your questions -

The most important things to look for vary with the subdivision, since subdivisions vary with the market you plan to sell to. At a minimum, though, you'll want fairly open streets that probably have some curve to them (slow traffic, make the neighborhood look more interesting, leave room for lot owners to build or plant in a way that provides them with privacy and mitigates noise from the street or neighboring houses), you'll want some minimum construction standards that probably enforce enough uniformity so that you don't have shockingly different houses sitting side-by-side, and you may or may not want a gate for the community depending on what buyers are asking for.

You're also going to have to look carefully at access. The immediate access issue is to major streets or highways and the feeder roads that carry traffic to them - are you going to be creating traffic jams and wrecks, can people get between the highway and the subdivision quickly, and can people get from the entrance of the subdivision to their homes quickly and easily? The other access question boils down to the surrounding area - how quick and easy is it to get to work, to get to restaurants and shopping, to get to the nearest hospital, etc.

Instant dislikes in a subdivision? Ugly or mismatching houses either in, adjacent to, or visible on the way in to the subdivision. Too small lots, which suggest that noise and privacy are going to be issues. Ugly houses, incidentally, include houses that have graffiti, have been left incomplete, or simply look cheaply-made. Streets that are too small (making it hard to get in and out and creating higher risks for kids playing around the house) or too large (fast traffic = noise and hazards), and streets that curve in weird ways to that you can't see oncoming traffic well before getting into an intersection are potential deal killers. Construction crews leaving nails and trash all over the place can be a problem too. Finally, bear in mind that potential buyers will definitely look at the lots that have already been built on to look at the neighbors' cars, how the neighbors take care of their property, etc.

Roundabouts or 4-way stops don't really matter unless you have a lot of drunks, teenagers or old folks (in which case stop signs are your friends) or you really need to both slow and smooth the flow of traffic (that's where you opt for roundabouts. Note that visibility in all directions becomes substantially more important with roundabouts.

HOAs suck to live with - I deliberately bought a house where I did not have to deal with one - but you're going to need someone to manage the lake, trails and other common property once you've sold out all the lots. I would suggest naming yourself the HOA until all lots are sold.

The road system is going to have to have room for emergency vehicle access. This isn't a like or dislike, this is required in all city ordnances, and you'll have a hell of a time getting insurance without them. Other than that, the outlines of the subdivision are going to be set by the topography and location of the land you're going to be subdividing, and you should expect roads to follow from that. For the reasons mentioned above, I would suggest steering away from just imposing a grid system on the land. You may also find that you need a greater road area than you expected in order to deal with rain runoff.

Wood or wrought iron fencing? You don't care. A wood fence with last at least twelve years (twenty isn't out of the question), so put in a wood fence and let the HOA get all fancy later if it wants to.

Would I live there? No. For that kind of money I would expect to have my bathroom window a lot more than six feet from my neighbor's kitchen window. Don't make the mistake of chasing every penny by trying to squeeze the land into cookie-cutter little lots, because you'll limit the hell out of the size of your pool of potential buyers that way. If anything (I'm assuming you've got 50 acres to play with), you'll want a mix of lot sizes (and prices).

Leave out the fucking speed bumps.

Don't have alleys with sub-units on them with addresses that correlate to the main streets opposite their location. Better to just have every lane with a separate name. On the same account, don't build double-units where one has a nice covered porch and the other has jack shit but a door on a stoop.

Roundabouts take up a lot of space. And Americans aren't really used to them so they tend to annoy people.

Not on the side of a volcano. Check.

Wife’s family has partnered with various developers over the years, on a few parcels of former ranch land near San Antonio. One time a partner declared bankruptcy and the family ended up in court with him because they stood to lose the real estate they put into the partnership.

Now they just sell the land to a developer and don’t participate in the projects. I think that’s a smart way to do it. As my father-in-law used to say: “pigs get fat, hogs get slaughtered”.

quote:

Now they just sell the land to a developer and don’t participate in the projects. I think that’s a smart way to do it. As my father-in-law used to say: “pigs get fat, hogs get slaughtered”.

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Good advice. The other comments from a retired real estate attorney and commercial banker are very accurate. There are so many problems and difficulties with this sort of thing, that you cannot even imagine.

quote:

Originally posted by arfmel:
Wife’s family has partnered with various developers over the years, on a few parcels of former ranch land near San Antonio. One time a partner declared bankruptcy and the family ended up in court with him because they stood to lose the real estate they put into the partnership.

Now they just sell the land to a developer and don’t participate in the projects. I think that’s a smart way to do it. As my father-in-law used to say: “pigs get fat, hogs get slaughtered”.

Yep!

The developer wanna be always proposes that you put up the land, he will do the work, and “we’ll split the profits xx/YY. We can pay the costs with a bank loan I can get.”

A variation of this is to sell the land to a developer with a note for a large part of the price, secured by a deed of trust on the property, but which will be subordinated to a bank loan for development costs. When things go bad, as they often do for any number of reasons, the greedy bank forecloses it’s deed of trust, wiping out the seller’s lien. The deal will seem attractive because the developer buyer will offer a higher price than a cash buyer.

“In God We Trust. All others pay cash!”

I think an engineer is going to be required for submittal. Do you know the development costs? Impact fees? Turn lanes on highway required?

A professional developer will be able to help you plan it. A civil engineer will be able to design it. A general contractor will give you development costs. A real estate broker will be able to do a complete market analysis to let you know if your are in the ballpark with lot costs.

Get ready to spend about $50,000-$100,000 on preliminaries and engineering to see if it’s feasible.

Be dead on accurate in awareness that the government may get involved.

For example, that 2 acre lake may turn into a wetland and get the EPA and other state and federal agencies all excited about it, they can absolutely derail you and cost you a fortune.

Good luck to those involved.

My uncle has done a few sub-divisions. They need to be prepared to be in debt way over $1M and hope to stay liquid long enough to sell enough to stay afloat...

There was a few years where he was a paper millionaire with no cash flow. He didn't build out houses either, that was just sub-dividing and selling lots.

If they know they can sell that many $600k houses in a semi-reasonable time frame (2 years?), roll the dice!

quote:

Originally posted by mcrimm:


I would find a successful, experienced developer and partner.

I think this is the key and all encompassing point. You need someone who's been there and done that.

You'll be dealing with politics and political connections, legal requirements, engineering requirements, access to building materials and labor, etc.

You want someone who's already paid the tuition and gotten the degree and earning a business in building tracts. Otherwise, your rate of return is going to suck because you'll be very inefficient and perhaps ineffective and possibly taking on some huge risks.

quote:

Originally posted by buddy357:
You lost me at 600k.

quote:

Originally posted by Johnny 3eagles:
Lost me at 1/3 acre.

That doesn't sound like good value to me.

1/3 acre is only 14,374 square feet. $600k house better be 4,000 square feet. That leaves about 10,000 square feet which sounds like a lot but that's just a little over 2 full size basketball courts.

$600k used to go so much further.

Listen to JALLEN.

Otherwise, make sure the streets are wide enough for parking on both sides of the street leaving room for a fire truck to pass through. Lots of new development in North Texas is skimping on street widths to allow for more houses. Put in alleys with rear entry garages to avoid street clutter out front.

Listen to JALLEN!

Not sure how property taxes are assessed in Texas but in WV it can bite a developer unless "special arrangement" has been negotiated in advance. Scenario; 100 acre of undeveloped land is currently being assessed at $500,000 with the owner paying $8,000 property tax per year. Speculator begins moving dirt improving the property to make a nice development of 150 building lots which are promoted to sell at $175,000 each. 150 x $175,000 = $26,250,000. Assessor does the math and revalues the property at $20,000,000 and tax goes to $320,000 per year. Of course as each lot sells $175,000 in value comes off and goes to the new owner but there can be a few years where the developer has to pay a lot of tax. In Texas the lots would probably sell off so fast it might not be a concern!

My daughter and SIL live in a planned development in northern VA.
I like:
That it was diversified with one section being slightly smaller lots say 1/4 acre for smaller homes (perfect for empty nesters or young couples) and the rest larger 1/2 lots for higher footage homes.
Wide streets (cars can park on both sides) with curves, cul-de-sacs, pipe stems, add interest and slow traffic. Sidewalks on both sides. Lighted but with soft street lights.
Common areas impeccably maintained.
Homes all work together with somewhat similar styling but made unique with different exterior finishes and colors.
Stop signs, no round-abouts.
Pool, gathering room, and tennis courts.
Playgrounds with climbing wall, jungle gym, swings, tunnels, etc., (stuff for all ages) every block.
Mounted trash containers and dog stations along the sidewalks.

The HOA is effective of making sure homes and yards are maintained, trash cans not left out, etc. When they just replaced their roof it had to be approved by the HOA, same with siding type and color.

I hate subdivisions with big houses on tiny lots. Would never even glance at it.

If I had $600K to spend - I'd buy somewhere with acreage so I didn't have to see/listen to any neighbors. I'd wanted wooded acres with heavy growth between the lots. Builders go in and bulldoze the entire subdivision and screw it up right from the start.

quote:

Originally posted by SBrooks:
I hate subdivisions with big houses on tiny lots. Would never even glance at it.

If I had $600K to spend - I'd buy somewhere with acreage so I didn't have to see/listen to any neighbors. I'd wanted wooded acres with heavy growth between the lots. Builders go in and bulldoze the entire subdivision and screw it up right from the start.

So would I given the choice.

However if "north TX" is in the DFW area as I suspect, you don't get that choice unless you are going to get way, way out of the core areas. It's a trade-off like anything else and some folks have to go to where their job is rather than it coming to them.

To OP - unless your relative has extensive experience in this area, or is willing to hire that expertise, JALLEN is once again the sage to whom I would defer. Opinions, ideas and preferences don't matter; what sells in that specific market is all that matters. Some of the most creative and "nice" subdivisions or homes have been built by folks around their ideas of what they think is right. And failed.