Numbers behind the deal / Land and infill
What can a buyer pay for land?
Your client has a vacant parcel or a house on a large lot. A developer sees potential, but the asking price assumes a project that has not been verified.
The economic test
Work from the exit back to the decision.
Start with what the completed exit could sell for. Subtract the cost of reaching that exit and the buyer's required margin. What remains is a preliminary acquisition budget, not an appraisal or an offer.
Support the exit or income
Account for the costs and capital
Test what changes the answer
A worked example
A hypothetical serviced-lot exit
Hypothetical example • USD • Every figure is an assumption, not a market quote.
Four lots assumed
- Potential lot sales
- $800,000
- Survey, design, and approvals
- -$45,000
- Utilities, access, and site work
- -$180,000
- Financing and holding
- -$40,000
- Selling and closing
- -$40,000
- Contingency
- -$45,000
- Required buyer margin
- -$120,000
- Acquisition budget, including buyer closing costs
- $330,000
$200,000 per serviced lot. Both price and yield are assumptions.
Written consultant scopes and jurisdiction-specific fees.
Actual utility capacity, off-site obligations, access, and bids.
Funding terms and the time needed to reach the exit.
Assumed 5% of gross lot sales, including disposition closing costs.
Allowance for unresolved work; does not prove feasibility.
A $120,000 project allowance in both cases; buyer-specific, not a Renew standard.
Subtract acquisition closing costs to reach a purchase-price ceiling.
Only three lots feasible
- Potential lot sales
- $600,000
- Survey, design, and approvals
- -$45,000
- Utilities, access, and site work
- -$180,000
- Financing and holding
- -$40,000
- Selling and closing
- -$30,000
- Contingency
- -$45,000
- Required buyer margin
- -$120,000
- Acquisition budget, including buyer closing costs
- $140,000
$200,000 per serviced lot. Both price and yield are assumptions.
Written consultant scopes and jurisdiction-specific fees.
Actual utility capacity, off-site obligations, access, and bids.
Funding terms and the time needed to reach the exit.
Assumed 5% of gross lot sales, including disposition closing costs.
Allowance for unresolved work; does not prove feasibility.
A $120,000 project allowance in both cases; buyer-specific, not a Renew standard.
Subtract acquisition closing costs to reach a purchase-price ceiling.
Losing one lot reduces the acquisition budget from $330,000 to $140,000. The parcel's size alone cannot establish buildable yield. This example sells serviced lots, so it includes no vertical home construction. A finished-home exit must also include those construction costs.
Before you rely on the numbers
What can change the answer?
Yield is a feasibility question
Confirm the controlling jurisdiction, lot dimensions, access, setbacks, utilities, and approval path. A concept sketch does not establish an approved lot count.
Test retaining the house
Compare house-only renovation, retaining the house with a possible land division, and full redevelopment. Account for existing-house value, demolition, access conflicts, and different timelines before choosing a route.
Timing changes the residual
Delayed approvals or infrastructure work increase financing and holding costs. Reduce the acquisition budget when verified costs rise, rather than relying on future price growth.
Your next useful step
Bring the evidence you already have.
Start with what is available. These records help the review, but they are not prerequisites to making contact.
- Address or parcel identifier and asking price
- Listing, owner information, and county parcel record.
- Existing improvements, access, utilities, and known constraints
- Site visit, survey, utility providers, and controlling planning department.
- Any survey, concept, application, or approval
- Owner's file and official project records; identify which documents are still preliminary.
These are educational scenarios adapted from Renew’s Deal Analysis 101, Behind the Offer, and property evaluation teaching method. They describe no actual property or closed result. Replace assumptions with property-specific evidence before making a transaction decision.
Start with what you know
Bring us a property.
Bring the parcel before spending time proving a full development plan. We can identify which feasibility questions deserve the next review.
You continue representing your client. We work through you to evaluate the opportunity and agree the transaction roles and compensation before proceeding.
Our initial focus is the Treasure Valley: Boise, Meridian, Eagle, Star, Kuna, Garden City, Nampa, Caldwell, and Middleton.
Other opportunities
Explore another deal type.
Distressed residential
See how resale value becomes a purchase budget after repairs, financing, holding, selling costs, contingency, and margin.
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See the worked example