Real Estate Investing within 43,560 Square Feet

Real Estate Investment

May 03

The number 43,560 represents the number of square feet in an acre of ground. This amount of ground covers a square with just over two hundred feet on four sides.The value of land is affected by population density.  While this is not an absolute, often, the higher the population the higher the land value. Here are five examples of value creation.

The highest impact on land value is usage.

Land value is most affected by how it is used (said another way; how it is placed into service, or highest and best use) and its income potential.  Consider these examples:

  1. The wealthiest farmer in Fairfax Virginia was said to have made his money from learning how to buy land by the acre and sell it by the foot.
  2. Developers in California were granted permission to sell “standard” subdivision lots of 7,620 square feet: with the measurement starting at the lot line furthest from the street and ending in the middle of the street.
  3. The value of retail developments is calculated by the “front foot” – measuring the length of street frontage, whereas, width has far more value than depth.
  4. Shore land; ocean front, lake front and inlets are valued based on their appurtenant width along waterfront. Many waterfront lots are valued at multiples higher than adjacent land with no water access.
  5. In a major metropolitan, a lot can have significant value based solely on the view it provides.

Consider also how developers increase density by “going up” and building multiple stories on a single parcel.  For example, if an acre represents one square block and the entire footprint is build-able land with five stories, the square feet under roof equals 43,560 X 5 = 217,800 square feet of office, or retail, or residential usage.

We are accustomed to seeing these types of structures (hi-rises) and understand how vertical building increases value.

Valuation is consistently pushed upward with farmland; be it corn, soybeans, timber or some other crop, scientist, seed sellers and farmers continuously pursue greater crop yields from the same acre of ground.

The next time you hear someone say “land value is changing” you can ask them if it’s because of a new distribution of front foot land valuation or population density or zoning–just to see what they say next. It’s a quirky way to have fun, but fun all the same…

John Wilhoit is the Author of five books, including: “How to Read a Rent Roll: A Guide to Understanding Rental Income“.  Join the conversation at JohnWilhoit.com for updates, blogs, books and podcast. John’s latest book Rent Roll Triangle is available now on Amazon. In book stores soon.

For more information on real estate investing, home-ownership and property management, listen to the podcast John Wilhoit on Real Estate.

 

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About the Author

John Wilhoit is a real estate professional specializing in residential asset management and property management. John has an undergraduate Degree in Business and a Master’s Degree in Urban Studies. Learn more about John here.

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