Hi, I am new to this forum, actually new to any construction forum.  I just yesterday found a plot of land near knoxville, TN that I am currently interested in.  I have two big concerns about taking on this investment.  One is that the property seems highly undervalued.  It has utilities on site, has good acreage at the end of a subdivision (5+), and I'm told that the biggest problem is that the power lines running over limit the amount of build sites on the acreage to two (as no structures can be built underneath them), but it still seems awful low.  My second concern, as is almost everyone's is cost.  I have done a lot of research into all the steps and components of building a home, and I am also quite handy, as me and my father have fully finished two basements together including plumbing and some basic electrical.  My two questions are as follows:

What steps can/should I take to research the land to make sure it is a good investment? Who do I need to talk too?

What parts of the house can I legally build myself? Is it possible to subcontract and empty shell of a house with only load bearing walls/stairs installed where I can go ahead and finish the rest (like drywall, plumbing fixtures, kithen, flooring, paint etc?  I know this would dramatically cut my costs, and I am completely comfortable with these steps of homebuilding.

The undervaluing of the property is most likely due to the power lines.  Most people shy away from building near them.
How long has the property been on the market, in comparison to the rest of the subdivision? 

Contact the local building codes department. They should be able to answer your questions concerning the property and the amount of work you can legally do on your own. The actual finish work should be no problem. More likely you will need licensed plumbers, electricians, and HVAC installers. Should you need to install a water well or septic system, these will need to be done by licensed installers. Frankly, I would recommend that you hire qualified people to handle the mechanicals and structural aspects of the house, even if you 'think' you can handle them. These are the areas that can be the most devastating if not done properly. Mess up the drywall or painting, and it looks bad. Mess up the electrical, and it could kill you.

The most common error people make in valuing property is to think a parcel that can be split in 2 is worth twice as much as 1 parcel. The other problem is how much is one parcel with overhead wires worth. To figure that out you can do what appraisers call paired sales. Through a realtor or through the assessor look for the most recent sale of land under power lines. Then find a normal sale that is otherwise similar. If normal sold for $120,000 and "wired" sold for $90,000, the discount was 25%. These sales could be some years old; it's the discount amount you're after. Now figure out what a normal lot similar to yours is worth today, then discount by whatever figure you got through paired sales. The discount for converting 1 large lot to 2 can be found in a similar manner, or your realtor may be able to suggest how much. There is always some risk that you can't do it, some cost, and the value of your money while it's tied up. Where I work, the uncertain lot is worth only about 50% before it's split. This may be different where you are. So first lot that you definitely will own might sell for $160,000 without wires, or $120,000 under the wires. The second lot is uncertain, so its value is probably $60,000; the whole thing is worth $180,000. Obviously, all numbers and discounts are fictional; you have to do the investigation to find out what your local numbers are. Or pay an appraiser, or bug the H ll out of a realtor, who may not know anyway.

Unless you have the cash on hand to finance this project you need to talk to a bank to find out about getting financing.  Many banks are hesitant to provide construction load financing for owner/builder projects (even in good times) as they have a higher failure rate - "failure" being for example, house in unfinished and there is no more money and the structure is for the most part, unsaleable as is.  IE - not something the bank wants to own.  Also, many banks require the land to be paid for for owner builder projects so the land can be put up as collateral.   Banks look at the ratio of the value (cost) of land to finished project projected value and therefore large building lots are sometimes considered undesirable to the bank. 

>> What parts of the house can I legally build myself? <<  That is totally up to the AHJ - Authority having Jurisdiction.  Ie - the local building inspections department.  Start by checking out your state web sites for statewide laws.  You may likely be able to do it all.  If there is any real inspections department for your area, be prepared have them put through the ringer.  By "put through the ringer" I mean possible a number of reinspection fees and definitely some re-work.

>> Is it possible to subcontract and empty shell of a house... << There are companies who specialize in supplying shells.  Maybe many more builders would be willing to do so in this work starved economy.

Regarding the 5 acre lot, what are the sizes of the other lots in the neighborhood?  From an investment standpoint if you build a home on a 5 acre lot in a neighborhood of 1 acre lots (for example) you are almost automatically the most expensive house on the block and the least likely to recover your investment or make a respectable inflation adjusted profit should you decide to sell.

The good news is that in this economic environment there are deals to be had on building lots.  I was looking for a building lot about a year ago and found that there were probably 5 times the number available as compared to years past.  At least in my local area, builders just aren't building as the real estate market is dead.  Right now the company I work for has 10 houses sitting for sale that I built - it is killing us - and we rented 3 of those just to wait it out.  Still a lot of the finished lots that are available are the "dog lots" - the ones that are either more expensive to produce a finished product, or have some other undesirable inherent trait.  Through my experience though, the old "location, location, location" is the only sure thing in real estate.

Just my personal preference, but I wouldn't buy a lot with power lines on it.  I've looked at a few....