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We are started an a startup (Openland, W18) to find a way to product more housing and during initial research i found that there are a lot of empty lots in LA t

by ex3ndr 8y ago

We are started an a startup (Openland, W18) to find a way to product more housing and during initial research i found that there are a lot of empty lots in LA that costs about $10k-50k. Tried to search in different states and found same lots at Long Island. So why people are not trying to buy land and build something on it instead? Buying a house will cost magnitude more than buying land and building your own house. Building will take time and resources, but... paying for a loan for 30 years? I think i can spend two years building my own home for the fraction of a cost of buying existing one. Why no one is doing this?

pxeboot 8y ago
People are doing it, but building a home is a lot of work and usually ends up costing far more than anticipated unless you really know what you are doing.
- ex3ndr 8y ago
  May be the solution is simplifying building instead of dealing with existing one? Even in SF there are a lot of land for housing! For example, there are hundreds of body repair/tyre shops in SF. Why city ever need them in the city where Uber wins over owning your own car? But you can't just buy them and build more housing - in most cases you need to wait several years to "clean up" the soil.
  - timr 8y ago
    "Even in SF there are a lot of land for housing! For example, there are hundreds of body repair/tyre shops in SF." Yeah, well...those places are already in use. And if you want to change that use, you first have to buy the land from the people who are already using it. And that's expensive, because people know what the land is worth. In other words: those auto repair shops are there for a reason. You can't just ignore the reason(s) and pretend that the land is vacant. It's not as if every SF landowner is behaving in an economically suboptimal way because they're all stupid.
    - ex3ndr 8y ago
      Sorry, it seems that i explained my ideas badly. This is exactly what i am saying - it is economically suboptimal. They will be there until they are profitable. But problem not in the land price itself, but also waiting for 3 years until you will be able to start new construction, this delay will increase actual price of this piece of land up to 30%. There are many ways to reduce this delay.
      - timr 8y ago
        "This is exactly what i am saying - it is economically suboptimal. They will be there until they are profitable." No, you believe they're economically suboptimal, and you're making up excuses why reality disagrees with your theory. "But problem not in the land price itself, but also waiting for 3 years until you will be able to start new construction, this delay will increase actual price of this piece of land up to 30%." Proof of work required. You're going to have to prove that three years is a typical delay; that this results in the stated 30% price increases; and that this is the actual reason that your hypothetical auto-repair shops aren't all apartment complexes. There's a simpler explanation: just as commercial rents are higher than residential rents, commercial uses of land are typically far more valuable than apartment buildings. If a redevelopment doesn't pay landowners a significant multiple of their current (commercial) revenue, they're not going to do it. Most apartment projects can't come close.
        ex3ndr 8y ago
        > this is the actual reason that your hypothetical auto-repair shops aren't all apartment complexes. Sorry, i am not native speaker, but isn't it the same as "economically suboptional"? > There's a simpler explanation This neighbourhoods are mostly commercial districts that requires the first story to be commercial and other stories to be residential. Building up doesn't change commercial use of this buildings but just add more housing. > No, you believe they're economically suboptimal, and you're making up excuses why reality disagrees with your theory. I am not "believing", this is just a one hypothesis. I could be wrong, of course.
cascom 8y ago
A. It’s very easy to go over budget building a house, and therefore a riskier proposition for low-income people B. It can be much harder (higher down payment/harder to qualify) to get a land loan and a construction loan, Vs. a mortgage + more expensive as you need to pay for all of that for the time the house is being constructed and also pay for a place to live... C. Often times lot values imply the highest density development e.g. in order for the purchase price of a lot to make sense you can’t just build a single family home but need to build 3 town homes for the economics to workout
scruffyherder 8y ago
Pretty sure you can't just build a house in America. What about all the zoning, permits, regulations, planning, environmental impact etc. The paperwork alone would be a nightmare! Housing has come a long way since the days of the mail-order Sears & Roebuck assemble it yourself house.
- ex3ndr 8y ago
  There are a lot of startups and services to solve this problems. Unfortunately, This market is in its very early days.

by ex3ndr 8y ago

pxeboot 8y ago

People are doing it, but building a home is a lot of work and usually ends up costing far more than anticipated unless you really know what you are doing.

ex3ndr 8y ago
May be the solution is simplifying building instead of dealing with existing one? Even in SF there are a lot of land for housing! For example, there are hundreds of body repair/tyre shops in SF. Why city ever need them in the city where Uber wins over owning your own car? But you can't just buy them and build more housing - in most cases you need to wait several years to "clean up" the soil.
- timr 8y ago
  "Even in SF there are a lot of land for housing! For example, there are hundreds of body repair/tyre shops in SF." Yeah, well...those places are already in use. And if you want to change that use, you first have to buy the land from the people who are already using it. And that's expensive, because people know what the land is worth. In other words: those auto repair shops are there for a reason. You can't just ignore the reason(s) and pretend that the land is vacant. It's not as if every SF landowner is behaving in an economically suboptimal way because they're all stupid.
  - ex3ndr 8y ago
    Sorry, it seems that i explained my ideas badly. This is exactly what i am saying - it is economically suboptimal. They will be there until they are profitable. But problem not in the land price itself, but also waiting for 3 years until you will be able to start new construction, this delay will increase actual price of this piece of land up to 30%. There are many ways to reduce this delay.
    - timr 8y ago
      "This is exactly what i am saying - it is economically suboptimal. They will be there until they are profitable." No, you believe they're economically suboptimal, and you're making up excuses why reality disagrees with your theory. "But problem not in the land price itself, but also waiting for 3 years until you will be able to start new construction, this delay will increase actual price of this piece of land up to 30%." Proof of work required. You're going to have to prove that three years is a typical delay; that this results in the stated 30% price increases; and that this is the actual reason that your hypothetical auto-repair shops aren't all apartment complexes. There's a simpler explanation: just as commercial rents are higher than residential rents, commercial uses of land are typically far more valuable than apartment buildings. If a redevelopment doesn't pay landowners a significant multiple of their current (commercial) revenue, they're not going to do it. Most apartment projects can't come close.
      - ex3ndr 8y ago
        > this is the actual reason that your hypothetical auto-repair shops aren't all apartment complexes. Sorry, i am not native speaker, but isn't it the same as "economically suboptional"? > There's a simpler explanation This neighbourhoods are mostly commercial districts that requires the first story to be commercial and other stories to be residential. Building up doesn't change commercial use of this buildings but just add more housing. > No, you believe they're economically suboptimal, and you're making up excuses why reality disagrees with your theory. I am not "believing", this is just a one hypothesis. I could be wrong, of course.

cascom 8y ago

A. It’s very easy to go over budget building a house, and therefore a riskier proposition for low-income people B. It can be much harder (higher down payment/harder to qualify) to get a land loan and a construction loan, Vs. a mortgage + more expensive as you need to pay for all of that for the time the house is being constructed and also pay for a place to live... C. Often times lot values imply the highest density development e.g. in order for the purchase price of a lot to make sense you can’t just build a single family home but need to build 3 town homes for the economics to workout

scruffyherder 8y ago

Pretty sure you can't just build a house in America. What about all the zoning, permits, regulations, planning, environmental impact etc. The paperwork alone would be a nightmare! Housing has come a long way since the days of the mail-order Sears & Roebuck assemble it yourself house.

ex3ndr 8y ago
There are a lot of startups and services to solve this problems. Unfortunately, This market is in its very early days.