Land Use & Zoning
What is 'teardown development' in Illinois suburban and urban markets?
ADemolishing buildings for highway construction; requires state approval
BThe practice of purchasing older, often smaller homes, demolishing them, and building larger new homes on the same lot; common in desirable Illinois suburbs and Chicago neighborhoods✓ Correct
CGovernment condemnation of dilapidated properties in blighted areas
DThe removal of abandoned industrial buildings for environmental cleanup
Explanation
Teardown development occurs when buyers purchase existing homes primarily for the land value, demolish the structure, and build new construction. It is common in desirable Illinois suburbs (Winnetka, Hinsdale, Oak Park) and Chicago neighborhoods (Lincoln Park, North Shore) where land values are high relative to the value of older homes.
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Key Terms to Know
Net Operating Income (NOI)
The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
ZoningLocal government regulations that control land use by dividing areas into zones specifying permitted uses, building sizes, and densities.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
Math Concepts
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