Land Development Opportunity Advice Wanted

[Andrew Thomason]

Here is the scoop. I have an opportunity to purchase class c land from my in-laws. It would be a deferred payment to them after 5-7 years. It is 2.32 AC and in a prime location in the fastest growing city in Iowa. I have no experience in land development, however my business partner does. They are wanting a premium price for the land.

1. How much value would getting a site approval plan add?
2. If we took the project the distance.. The project would be quite large in value, which I don’t have the financing or business history for. Is it a better idea to partner with a developer or raise capital? Thanks in advance.

[Stuart Udis]

The information you provided on the opportunity is not sufficient for anyone to help. Acquisition price? Environmental or storm water control issues? Access to utilities? What exactly is being built? As complete value?  I personally wouldn't be able to provide any guidance as I am not familiar with this market but perhaps other BP members can if more details are provided.

 Generally speaking if the entitlement process is by-right, meaning the permitting can be completed based on the in-place base municipality zoning, the approvals add less value than a situation where the land might be zoned  let's say for an autobody use and the developer obtained variances to build dense multi-family building. Land will be valued higher with approvals in place, but the nature and complexity of the approval process are key factors.  

If you are not familiar with all of the pre-requisites prior to building permit issuance, I would recommend you first speak with a civil engineer who can create a checklist of approvals. Also, it's a red flag if you are coming to the BP forums for answers to these questions if you purportedly have a business partner who is experiences in this space? Perhaps you should also take better inventory of who you are partnering with because land development is a complicated space and it will be difficult to attract LP capital if your partner is not experienced.