Whether you’re looking to get started in property development or have been working in the industry for a while, it’s vital to understand the best practices when it comes to purchasing land for development. Some developers work exclusively with already existing structures and others focus only on land, but many property developers fall somewhere in the middle and will work with either type of property, depending on how it suits their needs. Here are some tips on how to purchase the best land for property development and what to take into consideration as you do so.
Understand land use requirements
Just because you have the approval to build on a certain area of land doesn’t mean that all the other details are in place for what you want to build. How many buildings can you place on the land? How many people can live there? Is it for commercial, residential, or a mix of both? Contact all levels of authority and be clear about your plans so you know it’s feasible before purchasing.
Who handles building?
Are you going to be handling all the development on the land or are you outsourcing all or part of it? Before purchasing, ensure that whoever is helping with the building process agrees that the land is suitable for what you want to build.
What is the location like?
You might find a great deal on land, but make sure it’s in a good location. How close are you to larger cities and towns? Are there job opportunities nearby so the commute is reasonable? What about local restaurants, shopping centers, or other attractions? Are you planning to build a commercial site? Is there competition in the area? Knowing the answers to these questions (and various others) helps you know whether or not purchasing this land is reasonable in a business sense and will get you your investment back.
Even if you’re approved to build on a patch of land, make sure that it also has appropriate utility allowances. Sometimes, water rights are separate from the land you’re purchasing or affect other nearby properties. Purchasing land can become extremely costly if you’re responsible for setting up utilities like electricity, sewer or septic systems, cable, propane tanks, and various other lines you may need. Learn what is already on the land, what you need to add, and how much it all costs before making a purchase.
No matter where you’re purchasing land, evaluate any risks of natural disaster. Could there be mudslides or flooding? What about wildfires? Do some research on the area to learn if natural disasters have been a risk in the past. If you do purchase the land, ensure that you have adequate insurance for any disaster that could occur.