A successful land development project involves several distinct stages of behind-the-scenes work to turn your vision into reality. Here are some of the most important things to know about turning a concept into a finished property!
Identify a Local Need
Any successful land development project starts with considering what types of buildings the area you are looking to develop is most in need of. Your community may benefit from more affordable or luxury housing, entertainment options, specialty restaurants, or other types of businesses. Narrow your options to a few projects that fit the current needs of your target market. This can help you gain support from other potential investors and the people that will eventually benefit from your land development project.
Determine the Economic Feasibility of Your Vision
Not every idea will work well in every community. Be confident that you will be able to obtain a strong ROI once your land development project is complete. This is an important step in determining whether it fits the current market conditions. No land developer can be certain that any project will succeed in advance. Making sure your vision makes sense for the current economy can go a long way toward improving your chances of selecting an economically feasible land development project.
Select a Reasonable Offer Price
Consider how much a particular piece of land is worth. This can help you determine whether it fits the project you are considering. You can use information about the amount you expect various aspects of the project to cost, how much you expect to receive once it is completed, and typical rates for similar projects in your area to determine an appropriate offer price. However, you will need to have the contractors officially submit bids on your behalf.
It would be ideal to accept your lowest offer. However, you will likely need to negotiate to determine a final price. It is also a good idea to determine the highest offer you are willing to make in advance. This is to make sure you are prepared to make decisions you and any other investors are comfortable with.
Understand Local Zoning Codes
Most zoning codes can only accommodate certain types of buildings. It is important to make sure the area you are considering is an appropriate fit for your development project before moving any further in the planning process. Areas that are primarily residential often have strict limits. These include the number and types of other businesses that may be allowed. Also, business districts may not be able to accommodate single-family houses. Understanding these laws is a must when it comes to making sure your plans align with local requirements.
Secure Your Financing
When you have a preliminary plan for what you want to do with your land development project, you will need to begin working on securing the financing you need to fund it. Your financing options will generally depend on the type of property you are planning. Attempting to determine financing too early is unlikely to be as helpful as you might expect. Comparing each potential lender's loan-to-cost ratio (LTC) and other factors that impact your final cost and how much you will be expected to pay upfront can help you determine which financing option is the best fit for you. Keep in mind that most lenders will only provide approximately 80-85 percent of the total anticipated cost of your land development project.
Select Contractors and Complete Construction
Once you have secured the funding you need, you can begin the process of evaluating potential contractors to construct your property. The construction process will generally begin with any adjustments that need to be made on the ground. These include adding or removing roads, sidewalks, or parking lots. Your property will then be built on top of the completed or nearly completed base. You will also need to work out a payment schedule prior to getting started. Most land development projects will take much longer than your contractors can be expected to work and meet their own needs without being paid. Contractors will generally expect to be paid periodically. Every two weeks or after finishing each stage of the project, for example.
Market Your Land
Finding just the right buyer for your finished property is the final step in getting the most out of your investment. Learn the type of buyers that might be most likely to be interested in your property from the beginning. Be open to conversations with potential buyers that express interest throughout the building process. You generally will not need to make a final decision until your property is ready. This stage may involve a wide range of types of communication with individuals or organizations that may be interested. These include working with real estate agents and creating digital and paper marketing materials. Also, responding to emails and social media messages from potential buyers.
Fill a Specific Need in Your Community
Once a well-planned land development project is complete, it will fill a specific need that enhances your community. It can take time to settle on just the right project for a particular area and locate the resources you need to turn your vision into reality. However, your finished property will be capable of improving the lives of specific members of your target market. It will improve the appearance and functionality of its entire street, neighborhood, or community. You can then begin considering options for your next land development project. If your initial project was particularly successful, planning a similar idea in another neighborhood may be a good choice for further developing your community and serving even more people.
Working with us can simplify every stage of the land development process. Contact us today to learn more about what to expect as we help make your vision a reality!
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