How to think about assemblage


When you’re in a hot market, every second thing you get from brokers is a development opportunity. That’s generally code for “over-price land”.

And I’ll tell you what your first impulse is: To see if you can maybe buy the land on either side and have that make the project work. (That’s called “assemblage”.)

But this won’t, and here’s why:

Buying land when it’s not for sale is almost never cheap. Sure, every once in a blue moon, you run into someone who really doesn’t know what their property is worth. But, mostly, you find yourself having to make a godfather offer to turn a holder into a seller.

And, if you start out with an overpriced piece of land (the one advertised as the “development opportunity”) and you combine it with the one you got by making a godfather offer, the chances are that what you have is an over-priced assemblage that still doesn’t work.

You know what works? Starting with a good deal.

Then, you can go add decent or even over-priced pieces around it and the good one brings your average cost across the whole thing down to a reasonable number. So, you end up with a bigger over-all deal where the numbers still work.