Land development requires working with engineers, blueprints and municipalities. A development land investment can be very lucrative but takes knowledge of how to improve vacant property. Improvements on vacant land include the following:
Streets or roads;
Utilities such as gas, electric and telephone lines;
Curbs and gutters;
Sidewalks (if necessary)
Parking areas for commercial property
When developing unimproved property, you will have to work with an engineer who will draw up blueprints reflecting the improvements. You will then have to have the improvements approved by the municipality in which you are working.
Development land investment can take a year or more to get started. In some cases, property has to be subdivided to have separate tax parcels. Municipalities do not move quickly and often do no approve a plan on the first request. You may need to have an attorney help you push the development land investment through the various committees within the municipality.
If the property needs to be rezoned, as is often the case with unimproved property, you will have to apply for a rezoning permit from the zoning committee of the local municipality. A notice must be published within a certain period of time so all neighbors in the vicinity know how the property is going to be used.
If you are thinking of making a development land investment, you need to have extensive knowledge of the real estate market in the area as well as how the municipality works. If you are planning on purchasing vacant land where you will construct a strip mall, for example, you should protect your investment by making sure the contract to purchase the real estate includes a contingency that the property be zoned for business usage. There are several different types of zoning and they differ from state to state.
Zoning can determine whether the property can be used for residential, business or industrial type of use. There are other ways a property can be zoned for use and different ways to zone property for residential, business or industrial uses. In addition to knowledge of the real estate market, if you want to make a development land investment, you have to have some understanding of the zoning laws within the municipality in which the property is located.
Developing a good working relationship with the municipality representatives is also essential when investing in unimproved land. In most cases, the municipality will embrace any improved land as it will add value to the area. You must also consider he surrounding neighborhood when making a development land investment. Is the area oversaturated with houses? If so, surrounding neighbors may be glad to have a strip mall with a convenience store. Do a bit of research to see what the neighborhood where the property is located really needs.
Development land investment can earn a very profitable return if the investor has good knowledge of the market and the municipality is receptive to the development. Once the property is improved, the commercial real estate investor can build on the property or sell it for a profit as improved property to another commercial real estate investor.