Small Scale Land Development
How do I start small in land?
There’s no shortage of folks enamored with the idea of developing a piece of land to its highest and best use for a good profit.
It seems that the idea can quickly get a dose of sobering reality once you start looking at the undertaking in both money, scope and time. Combine that with a lack of practical experience and the idea can turn into a complete non-starter.
There is hope and I have some opinions that may be useful for practical minded developers who are willing to discipline themselves and swing the bat for singles, not home runs.
Start as a site land developer.
What is a site land developer?
We take an existing parcel that already has approved lot status for the zoning but needs certain improvements to become building permit ready.
The job is to further improve the existing lot to meet all legal and code requirements for a building permit issued by the local permitting authority.
Here’s a step-by-step example to look at.
Ok, start here - let’s go find an example lot!!
I jumped on Redfin and in less than 3 minutes did a search for vacant, already approved lots near my home in SW Florida. The results are in the image above.
My search results show a ton of lots ranging from a low of about $10k - to a high of about $40k.
There are many in the low, mid and high teens when I expand the markers. A $12 -$18k lot is what I am looking for for my area.
These lots are in the RS-1 residential zoning designation of my county,
They are already platted as existing residential lots.
Most are +/- 1/4 acre in size, and most all on county maintained paved roads with power, phone, cable & garbage service.
What’s missing in these lots?
Most of the lots don’t have sewer or public water available so they need a well and septic on the utility side of things.
Some of them are heavily treed and need clearing and grubbing.
Driveways are needed, utilities at the road need to be stubbed to the proposed building site and the building site needs to be cleared.
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So why do so many sit there and why doesn’t some builder go in and snap them up?
It’s because these lots are not building permit ready.
They need to be finished and sold by a site developer who made them building permit ready.
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The above image is a lot picked out of the ones shown earlier: asking price $16,500
It’s on a paved county maintained road and below are some additional details:
This lot is a prime example of what I am looking for. It’s zoned single family, on a county maintained paved road, close to all schools, easy driving distance to stores and restaurants and near 2 county parks in a semi-rural setting.
HOW TO START THE RESEARCH
Do not quit your day job! Remember, my opinion is for a disciplined approach and not a “swing for the fence” effort.
The following is by no means a comprehensive list, but here are some key things to look at regarding lots under consideration:
Get a feel for where opportunity parcels might exist in your area, preferably close to you.
Find a parcel of land that is zoned appropriately for the intended use.
Is there a Homeowner Association (HOA)?
I look for a parcel with existing lot status and fully complies as a potential residential building lot.
Does the lot have a minimum square footage requirement for a future home?
Is there an impact fee for new home construction?
What are the front, rear and side set back requirements?
Are there unusable portions of the lot due to environmental factors?
What is the water source? Are there fees for hookup?
Sewer or septic? Fees to connect?
Is concrete required for the driveway and/or apron? Is a culvert required?
What have like-kind, finished, and building permit ready lots recently sold for in the area.
Find the required licensed, insured and bonded contractors.
Determine the costs for the needed improvements and holding costs.
Calculate marketing and closing costs, along with taxes.
A stated earlier, this NOT a comprehensive list since every piece of land is different. Likewise, the governing regulations may be as well. Good luck!
Contact me at: ldr@landdevelopmentrealities.com
Photos courtesy of www.unsplash.com - Thank you Leah James, Matthew Smith, Bhanuka Dilshan and G. Jaka.
