Land developers and builders who want to sell you a house or a lot will try to sell as many parcels as possible. Land buyers must spend a lot of time to identify the parcels worth pursuing. They need tools that will help them quickly sort out the garbage and find the parcels they should consider further. For their preliminary screening, buyers usually use formulas or rules of thumb.

These rules of thumb are designed to provide rough estimates relating to the yield of a site and different cost factors because these are the key aspects in calculating the "right" price they should pay for the land. Land buyers will be able to tell within minutes if an asking price is reasonable based on the number of numbers that work. If the land parcel is substantially overpriced, the buyers can simply discard the property and move on to better prospects.

Commercial Land Developments

For residential and nonresidential land developments, it is not surprising that there are differences in the estimation of site yields. For retail or offices parcels, the yield represents the amount of possible building space. This is often based on the number of parking spots that can fit onto the parcel. It also takes into consideration the overall development restrictions imposed by the zoning laws, such as impervious coverage requirements and green spaces. To estimate the amount of land needed to park each car on the office property, a rule of thumb can be used (e.g. the square footage of the parking area plus the drive aisle). The amount of land taken up for sidewalks and walk ways would be estimated by another rule. Another rule of thumb would assume that $100/sq.ft. is the cost to improve vertically or horizontally. The square footage of an office.

Residential Land Developments


The rules of thumb applied to residential land developments would be designed to estimate the number of building lots that the parcel could produce once the subdivision had been completed, and the cost for horizontal improvements. 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 site yield rule of thumb might net out of the gross land area of the parcel the amount of square feet that would be wasted or couldn't be used for whatever reason and then would divide the result by the amount of the minimum lot size required by the zoning to come up with the number of lots. This is an example of how the rule-of-thumb calculation would look for a 15 acres vacant parcel zoned to 20,000 sq. 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 Land Development near me lots

The result will always be rounded up. So, there would roughly be 22 building plots for this lot. In the next step, 30 percent of the site's gross area was subtracted to account both for the wastage of land, the square footage lost because of natural constraints like slopes and floodplains as well as the area of land that would have been taken up by roads in the neighborhood.

It is important to remember that these rules can change depending on the geographical area. These are rough estimations, so make sure to modify them if necessary. It would not make sense to subtract only 30% of the gross site area if a large portion of the parcel is in floodplain. If you're unsure what rule of thumb to apply, go conservative.