Tips For Developing Land
Developing land can be profitable, but if you’re not prepared red tape, cost overruns, and building delays can make the process feel both endless and difficult. Want to ensure your land development goes smoothly?
In this guide we’ll discuss assessing your needs, finding the right property and staying on budget and on schedule.
Tips for getting started
Before you start looking for properties, you’ll want to spend some time thinking about what kind of project you’re looking to do. If you’re a first-time developer, you may not want to start off with an entire subdivision or a large-scale commercial property. You may also want to keep your first project close to home, where personal connections can help you with both the red tape and your search for a trustworthy, high-quality builder.
You’ll also want to look at what you can afford as you’ll likely be paying for some or all of the development costs with a loan. The size of the loan you can get depends on factors like your income, assets and how much experience you have with developing. Talking with a local banker can help you get a better sense of the loan size you can expect to get. More experienced developers may want to consider other options for financing, such as attracting individual investors or contracting with a seller who can help shoulder development costs.
Finding the right piece of land
Once you’ve thought about your ideal project and your budget, you can start looking for vacant land. Look at several properties that fit within your size and budget requirements and then analyze the locations. To do this, it helps to think from the future owner’s point-of-view. If you’re building a family home, you’ll want to look at the quality of schools, access to parks and the distance from the city or office developments where the owner is likely to be employed.
Once you’ve found a property that looks like a good fit, it’s time to ensure your investment is a sound one by looking at these three areas:
- Site desirability: good schools and transport links won’t save a property that’s located in a flood plain or near to a plot slated for undesirable development, such as a water treatment plant. You may also want an engineer to come out to look at things like soil quality, drainage issues or environmental problems.
- Local political situation: politicians can be a major roadblock to your development. Do your homework in advance by seeing if there is anyone strongly anti-growth or against the kind of projects you’d like to do.
- Financial situation of the local jurisdiction: a local budget crisis can mean serious permitting delays as staff is laid off or furloughed, or increased costs for infrastructure if the community can’t afford its usual share.
Controlling your costs and schedule
Once you’ve decided on a property you can move on to more in-depth planning. You can start by creating a master schedule, a key tool that can help you keep your land development project under control. Write down each step in the order it should be performed in, starting with planning and continuing through each step in the permitting process. While many tasks can be handled at the same time, keeping an orderly, updated schedule will make sure you don’t cause delays by missing vital steps. This is important, since the sooner you start construction, the less interest you’ll accumulate on your loan.
To keep things moving, know where you can speed things up. For example, consultants, engineers and architects can often complete work more quickly if you ask, but local agencies or regulators usually won’t.
Another way to keep your project on track is to work with quality contractors. While it may cost more to hire someone who works to a high standard, it can actually be more costly to work with someone who does subpar work. If planning boards ask for changes in design or city engineers cite you for not being up to code, it can cause costly delays. Working with people with a good reputation and inspecting the site often can make sure that quality stays high. And in the end, a commitment to quality will likely pay off a second time, when you start marketing your development to buyers.