RealTorch › The 15 Functions › Lot Acquisition & Development
Function 03 of 15Lot Acquisition & Development
Land is the one decision a builder can never reverse. Everything downstream inherits it.
This function finds, acquires and — where necessary — entitles and develops the ground the company builds on. The knowledge base opens with the hardest truth in it: buying decisions are irreversible. You can reprice a home, redesign a plan, or replace a trade. You cannot un-buy a parcel, and a good house on a bad lot is a bad house.
The work runs through four categories of land by readiness (finished lots, engineered lots, raw land, larger tracts), five methods of control (outright purchase, rolling option, rolling takedown, land bank, other), and a develop-or-don't decision that turns on whether you are being paid for the risk. The math that governs it is simple and unforgiving: raw cost per lot, finished cost per lot, and finished lot as a percentage of selling price.
Irreversible
Every other function can iterate. Land can't. The due diligence budget is cheap by comparison.
Control ≠ ownership
Options and rolling takedowns buy time and shift risk. Cash-for-dirt is the most expensive way to be right.
Finished cost per lot
Raw price plus development divided by yield. The number that decides the deal is rarely the asking price.
Lot-to-price ratio
Finished lot as a share of sale price is the screen. Blow through it and the plan has to carry the miss.
Atlas in action
A raw-land offering, an asking price, and the question every builder actually has: what can we pay?
62 lots is optimistic. At 54 lots, $2.1M breaks the ratio.
Your concept plan yields 62 only with 45-foot frontages; the last three approvals in this jurisdiction came back at 55–60 feet, which puts realistic yield at 54 lots. That moves raw cost per lot from $33,900 to $38,900, and finished cost per lot to $97,400 against a supportable sale price of $412,000 — a 23.6% lot-to-price ratio, just past your 22.4% screen. Pay $1.84M and the ratio lands at 22.1%. Comps support the 2,650–2,900 SF four-bedroom at that price; the 3,400 SF plan does not clear here.
| Seller case | Atlas case | At $1.84M | |
|---|---|---|---|
| Lot yield | 62 | 54 | 54 |
| Raw cost / lot | $33,900 | $38,900 | $34,100 |
| Development / lot | $58,500 | $58,500 | $58,500 |
| Finished cost / lot | $92,400 | $97,400 | $92,600 |
| Supportable price | $412,000 | $412,000 | $412,000 |
| Lot-to-price | 22.4% | 23.6% | 22.1% |
Composite example. The yield correction is the kind of thing that decides a deal — Atlas checks concept yield against what the jurisdiction has actually approved recently, not against the offering memo.
The offering memo is the seller's case, not yours
Atlas underwrites land against your own screens, your plan lineup and the submarket's real absorption, and shows the arithmetic so you can argue with it before you sign.
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