268 WILLIS FARM ROAD
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OVERVIEW
The key for development is in density. Developers must design a neighborhood to maximize the number of lots or units available without sacrificing the integrity of each individual home, townhome or condo that they are going to build.
The key in our ability to bring the greatest return on Murdoch Farm is to illustrate a high-density capacity for the property. In years past when sewer and water weren’t readily available, developers would have to settle for an R-20 zoning (20,000 square foot lots) since each lot needed to allow room for a septic system. Luckily, water and sewer would be available for Murdoch Farm (they were brought in for Gracelyn Park), so smaller lots at R-15 (15,000 SF) are now an option. A more aggressive plan would be to work with the town of Newport for a possible approval of R10 (10,000 SF).
In order to maximize the return and play to the developer’s strengths, they may choose to do a PUD (Planned Unit Development) to potentially include apartments, townhomes and single family homes. Taking this specific step is best left when a buyer is identified or, ideally, after closing.
AERIAL IMAGES OF MURDOCH FARM
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NEWPORT ZONING MAP
THE PROCESS
Our job is to net you the most money. Our experienced team will handle all details and drive the process. A developer may decide to apply for a PUD (Planned Unit Development) allowing them to incorporate multi-family homes, but this route necessitates a specific plan that would be tailored to the developers needs and strengths. Without the ability to predict what each potential buyer would like, the smartest thing we can do is to work with the town of Newport to re-zone to the highest advisable density zoning for a single family home neighborhood. This process is relatively simple and inexpensive, but the impact would net you the most money - more lots/units means more homes to sell.
The property is currently zoned R-20, which means lots would need to be 20,000 square feet. We will work with the town towards a zoning change, preferably to the higher-density R10 option, but a re-zoning change to R15 will also help a great deal.
During the re-zoning process, we will begin our outreach to regional and local developers and builders to create a sense of competition, driving up the value of the property.
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RESEARCH
Brian Chadwick, the Newport Town Manager, is prepared to help with the zoning change process any way he can. He advised that any request for a change must be consistent with land use plan and ordinance. From his standpoint, R-10 is not out of the question and R-15 should not be an issue given that adjacent Gracelyn Park is zoned R-15. Brian advises further partnering with him and with the zoning department prior to engaging with the planning board to create a strategy and avoid missteps.
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DEVELOPER RELATIONSHIPS
Here are links to projects we’ve recently completed for local and regional builders who would be ideal candidates to purchase Murdoch Farm.
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NUMBER OF HOMES
We met with Ron Cullipher, lead engineer for The Cullipher Group (pictured right), who handles the lion’s share of local development projects (he designed Graceland Park, located directly adjacent to Murdoch Farm). Firm numbers regarding the number of homes the property could support will take time to ascertain and will depend on input from the town as well as specifics regarding layout and infrastructure space needs. Per Ron, however, there is basic math that we can apply to provide you with rough estimates.
If we are able to get R10 zoning:
93.4 (upland acreage) x 43,560 (square feet/acre) divided by 10,000 (square feet/lot needed for R10) would be 406 lots. A general rule of thumb is to multiply the number of lots by 75% to allow room for infrastructure (roads, stormwater retention, etc.), which would take us to 305 lots. Therefore, IF we are able to work with the town of Newport to get R10 zoning, an estimate of 305 lots is a reasonable preliminary number.
RON CULLIPHER
If we are able to get R15 zoning (Gracelyn Park, adjacent to the property, is R15):
93.4 (upland acreage) x 43,560 (square feet/acre) divided by 15,000 (square feet/lot needed for R10) would be 271 lots. A general rule of thumb is to multiply the number of lots by 75% to allow room for infrastructure (roads, stormwater retention, etc.), which would take us to 203 lots. Therefore, IF we are able to work with the town of Newport to get R15 zoning, an estimate of 203 lots is a reasonable preliminary number.
MORE ABOUT RON CULLIPHER: Mr. Cullipher is the Founder and President of The Cullipher Group, PA. He has been in the engineering and construction industry since he graduated with a Bachelor of Science Degree in Civil Engineering with Construction Option from North Carolina State University in 1980. He began his career with the Tennessee Valley Authority as a quality control inspector and office engineer at the Bellefonte Nuclear Plant in Scottsboro, Alabama. After a short stint as a contract engineering employee at the Midland Michigan Consumers Power Nuclear Plant, Mr. Cullipher returned to eastern North Carolina and started a career with a local engineering consulting firm. Mr. Cullipher worked as a staff engineer, project manager, branch manager and then vice-president of that firm. After thirty-four years with that firm, Mr. Cullipher decided to open this firm and build a new foundation for future growth in the local and surrounding communities. Mr. Cullipher has extensive knowledge in the development industry and has provided engineering services for local governments, county schools, community colleges, hospitals and numerous private sector developments. The development of residential and commercial subdivisions, site planning, wastewater treatment and disposal, water distribution, environmental permitting and coordination with permitting agencies are the routine services provided. Mr. Cullipher has been fortunate to have experienced qualified staff on board to further the services in the community.
DEVELOPMENT COSTS & PROFITS
Developer costs include engineering (this is typically hundreds of thousands of dollars, depending on the scope of the project), installation of roads, drainage system, water and sewer, collection system for sewer, and a lift station for the sewer system if needed. At the time of infrastructure installation, hefty impact fees are due to the municipality. Of course, throughout what can be a lengthy development process, the developer will also have carrying costs. The developers we’ve spoken with and worked with in the past target a 30% return.
POTENTIAL SALES PRICE
CALICO (recent land/development sale): The recent sale we facilitated for Calico resulted in a sales price of $23,125/lot (80 lots at $1,850,000 total purchase price). The high price per lot can be attributed to the fact that at the time of purchase, the project was fully permitted and ready to go.
Calico was previously owned by two other developers who had each moved the design plan forward to its highest and best use, creating a final product that was a fully designed project at the time of conveyance.
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INDUSTRY: We spoke with a regional builder who oversees the construction of thousands of homes per year. He shared that when evaluating raw land for investment, their team typically lands at $10,000-$15,000/lot. Their infrastructure costs often fall in the $30,000-$40,000/lot range, creating a total investment per lot of $40,000-$55,000. Typically a developer would then place a 30% premium on the lot when they incorporate into a spec build or sell to a 3rd party to build, which creates a retail lot price of $52,000 to $71,500. He says their general rule of thumb is “not more than $15K, somewhere closer to $10K/lot” for the raw land.
In an effort to provide you with more specific guidance in terms of pricing range and not a “pie in the sky” number, we will run three scenarios.
We want to give you the full picture of how the pricing range may vary based on discoveries that are made during the research portion of our process.
The first is using Calico as a comp, $23,125/lot. This project was fully permitted and ready to go.
The second and third scenarios are using the high and low end of what our industry source referenced for raw land prior to permitting — $10,000 to $15,000 per lot.
Using Calico comp of $23,125/lot - below would be the estimated pricing:
R10: 305 lots X $23,125 = $7,053,125
R15 203 lots X $23,125 = $4,694,375
Using Industry standard comp of $15,000/lot - below would be the estimated pricing:
R10: 305 lots X $15,000 = $4,575,000
R15 203 lots X $15,000 = $3,045,000
Using Industry standard comp of $10,000/lot - below would be the estimated pricing:
R10: 305 lots X $10,000 = $3,050,000
R15 203 lots X $10,000 = $2,030,000
It’s important to understand that we advocate for our clients using the highest comp available when determining value.
We also know that the Calico comp was significant because of money, time and expertise invested. This is why we included the industry standard approach to show you the full spectrum of possibilities when it comes to value.
Obviously, as we continue to do more research, we will partner together to help sharpen your price point.
Bottom line: there are many variables involved with this process and we have the relationships and resources to net you and your family the most amount of money. We are up to the challenge and excited about the prospect of working with you and creating the best possible scenario for your sale.
