Developing land can be a great investment, but preparation is key. Want to ensure your land development goes smoothly? Follow these tips:
- Identify a general area. You may 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.
- Carefully consider the project size and scale. You’ll also want to look at what you can afford as 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.
- Find the right piece of land. Once you’ve got your target property 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.
- 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.
- Build a great team. 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.
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