When it comes to raw land development, investors are essentially combining multiple investment strategies into one: purchasing land, building new construction, and renting or selling the final product. The complexity of this deal type will demand a significant amount of planning from investors, before they ever even purchase the property. Do not let this intimidate you, as there are ways to systemize the process and make it easier to navigate.
Investing hoping to prepare should research the following factors so they know exactly what to look for (and evaluate) when developing raw land:
- Permits are required for almost any type of construction, development or renovation. When developing raw land it is crucial to research not only the permits required for these projects, but also the anticipated costs and timelines of obtaining said permits. Many investors underestimate the amount of time permitting can take, and should be careful to account for it when searching for and financing raw land developments.
- Zoning: Depending on where the land is located it will likely be in a designated zone, whether that is commercial or residential. In some cases, land can be rezoned but again it is important to add that into your potential timeline for a given deal. It is also important to note whether any potential land investments are located within a protected wildlife zone, flood plain, area with building restrictions, etc.
- Building Department: There are certain building requirements to take into consideration when planning any new construction project. These are often regulated by the city or locality in which the area is located, and could impact plans for the building. Do not simply rely on others (such as your builders and contractors) to abide by building codes, familiarize yourself with them as well to be sure any project is planned properly.
- Water: Water and sanitation are two of the most important aspects when planning a raw land development. Investors should determine if there are existing hook ups or water and sewage lines on the property and go from there. It is crucial that you research local requirements during this part of the process, as there are a number of regulations around installing and operating water lines for a property.
- Electrical: Last but not least, investors need to consider power not only for the future building but for the construction process as well. If there are not existing power lines to the land, you will need to contact local utility companies to start the process. Additionally, do not forget to consider cable, phone, and internet lines as these are also crucial aspects of land development.
If you are looking for a profitable real estate investment strategy, it may be time to consider a raw land development. Investing in land has a number of advantages over other investing opportunities. Separate yourself from the competition and add a raw land investment to your portfolio.