Land Developing Discussion

[Benjamin Aaker]

I understand that developing is pretty specific to the locality. I'd like to have a general discussion about the steps in developing land, from identification of the property down to getting the stubouts put in. I'm just starting out and have identified some land I like. What are five general steps we should take when we have found an interesting parcel?

[Greg Dickerson]

Originally posted by @Benjamin Aaker:

I understand that developing is pretty specific to the locality. I'd like to have a general discussion about the steps in developing land, from identification of the property down to getting the stubouts put in. I'm just starting out and have identified some land I like. What are five general steps we should take when we have found an interesting parcel?

There is a lot more to the process than 5 steps. Identification of property will depend on location, demographics, demand and the regulatory environment you will be facing. Also your financial strength will be a factor as well.

First step is to determine if the project will even work from a financial standpoint. Start with the end value of the buildings or lots and work backwards. You will need ball park cost estimates from site work contractors for site work, roads, installation of utility lines etc. For general infill, subdivisions and scattered lots builders can generally pay 20-25% of the value or sale price of the house for the land depending on demand and price point. This is for a finished lot ready to build. Not necessarily cleared but all roads, utilities etc ready to break ground. You can call some local production and spec builders and ask them what they can pay for lots. Usually They will tell you. After you determine the price point on the lots you work backwards form there and subtract all costs of the development and a profit margin you are happy with to determine the price you can pay for the raw land. I like a 30% margin for net profit just to be safe. Next check with the city or county to determine if you can do what you want to do and what is required for all zoning approvals and the time frame. You want to find out what the bonding requirements are, inspections, CO process, General permit fees, proffers, water/sewer tap fees and the process of setting taps and connecting, do you need to install manholes or fire hydrants. Ask if you have to install curb, gutter, sidewalks, street signs, street lighting or any other special requirements. Are there any specific street design or access requirements, DOT requirements, permits or traffic studies. DWQ, Army Corp or any other environmental requirements or permits. You also need to check with the utility companies and get cost estimates from them for availability, fees, hookup charges, transformer and power line/power pole locations or relocation requirements, water, sewer, gas, cable etc.

This is just a quick high level overview f the process but will give you some things to think about and a good starting point.