Updated 1.2.26
It’s like, what does the development cost look like? And therefore determine what my lot price is going to be. So something that’s the same as six and then but the Miller developer, he’s still not going to build exact houses on the lot. Well let me let me give you an example. If home builder coach paid $1 million for the piece of land and it costs me.
Let me just let’s work out an example. Land is $1 million.
Development cost is usually going to be about four times what your land cost is going to be. So your total cost to do the development.
Is $5 million.
Well how many lots can home builder coach make out of that? So this is the thing that we call,
Jordan. How many? I can’t think of the word, density. Thank you. Thanks, Jordan, for not helping me. So this is what we call lot density.
So lot density. Is this in a normal neighborhood that Shaw Homes used to build on our low end? We would do two lots per acre. That’s usually a higher end product. Those are half acre home sites. People like a nice half acre home site, but my density is low on the high end, right? So I might do, 4.2 lots per acre.
Okay. Let’s just say for round numbers, I have, 50 acres. It’s just a math problem.
If I have 5 million into it. And I have, 4.2 lots per acre. Somebody do the math for me. Get your calculator out.
50 acres times 4.2 lots per acre. How many lots do I have to take? So my cost was 5 million.
And my lots were 210. What is 5 million divided by 210?
- You don’t know? 23 to 23,008. Oh nine. Now that’s cost. That doesn’t have a profit margin. And I need to make money off of it. So let’s just say you end up with a $30,000 lot, whatever it works out to be. Now that’s at 4.2. Let’s go back. And the math is easier on this. Home builder coach has two loans per acre.
Right. I have 100. What’s my lot cost?
Half as much. 50,500 lots. Oh, yeah. I still got 5 million. These are on the half acres and I have 100 lots. My cost is 50,000 per lot. So probably my price is more like 65,000. So instead of a 23,000, $30,000 a lot, I have a $65,000 lot because of my density. Does that make sense? Yeah. Do you ever to, like, go back and figure it out, like cost per acre or when you have?
Because not every community is going to have a whole 4.2 for the same size. Lots. And, it really just comes down to density. So I’ll just this is getting more complicated, but I’ll give you the whole the whole shebang here. If I buy 50 acres, I’m going to have like eight acres. That is what we call net unusable acreage.
And there’s net usable and net unusable acreage. If home builder coach have like, a swamp on part of the 50 acres. But the way the land is, I had to buy part of the swamp. Well, I’ll go back to this development right here. Tons of swamp. Tons and tons of low lying areas here. Let me show you.
See all these ponds and stuff right here? This lake, this lake and this water go in here. That’s because there was this huge creek. There was originally a small pond right here, but this became part of the drainage, or what we call overland drainage easement of the entire master plan development. So we made all the land of the whole development slope into this and shed the water off.
So you don’t have, you know, floodplain and stuff like that. Does that make sense? But it made this, this pond right here, this kudzu lake is huge and it’s multiple acres. So it takes away from your net usable acreage, but you still had to pay a $100,000 an acre, even for the pond part. You see what I’m saying?
Yeah. So it just gives you less net usable, which could cost, cause your, density of lots to go down and therefore your price to go up. But does the pond make it nicer to live around? Yes, it’s pretty. Right. So, I mean, there’s there’s sort of a balancing you can see this is somewhat complex, but this is kind of how you figure out what it should be.
Yeah. And the city unfortunately often has a lot to do with this because they say we’d really like a builder to build some affordable housing here. Every city in America will say that to a home builder coach. They all will. And if you take, layout of your neighborhood that has really, really, narrow lots that create high density and you show them these really skinny houses with little one car garages or no car garages.
Almost every city in America will go, you’re not doing that in my city. You’re not lowering my property values. No, I vote no. You know, it goes to that literally to the building. The city council, and they’ll vote no on it because they’ll look at the pictures of the houses you’re going to build and they’ll go, no, we’re not doing that in my city.
But they’ll tell you. But if you can figure out a way to build some affordable housing, we really want that. Would you please build some affordable housing? That’s why we throw them under the bus. That’s why we throw them under the bus. Yeah. Back up. I mean, it’s literally every city does this. There’s this city close by here.
And one of the, surrounding areas around Tulsa called Jenks. And it’s kind of where the snooty people live. And they’re all. They’re always screaming. We need affordable housing. Well, we’ve taken multiple developments to them. They’re like tiny little cracker box houses, very affordable to build. And they’re like, no.
Well why not? Well, they need to be bigger. They need this looks cheap. You said affordable housing, right? Did I know? So same word. Affordable, cheap. Same thing. You can’t build that in this. And we don’t want to lower property values in Jenks.
So, like Murphy and I, we we don’t want that kind of housing around here. You know, when we’re at the club, we don’t want, property values going down.
That’s my best. Thurston Howell, the third impersonation right there. Do you even know who Thurston Howell the third is? Yeah. Yes. Okay. All right. Just checking. I mean, some people don’t know. I don’t think my parents would know. That is why when I was stressing out about people not knowing Eric Clapton was. I’m. They didn’t know that there was.
And I was like, Natalia. Yeah, I think it was Italian. Who? Yeah, I know him all, but come on. Timmy had a story problem in math, and it was about using a fax machine, and he literally had a mental breakdown because he couldn’t comprehend having to pay to use a machine to send information. Wow. He couldn’t. I had to literally Google it and be like, no, this is what it is.
He just couldn’t. He couldn’t. He’s like, you had to pay to do that. I’m like, yes. Yes. He couldn’t. It was like, why? How old is that math problem though? Seriously? How old was that? In fact, somebody used to, use a, a feather that had dye called ink in it to scribe on a piece of birch bark to then, have a horse carry cross-country to deliver to someone.
Yeah. I’m glad you’re not training us via Raven or passenger pigeon. Guys, we’re going to have a smoke signals meeting this week for our sales funnel. Keep an eye on the sky for the smoke signal sales until.
Yeah. So, did home builder coach answer your question, though, Ty? Did that help? Yeah. I mean, the big thing only came to like, you know, when we get these developments, knowing what the value is, especially on phase two. And. Boris, what what kind of 489 you tell. I have no idea. But also it’ll help me not sound like a moron if I’m pitching, you know, like, hey, this is what the customer says, but I know this isn’t the work because we can’t build it, right?
