Land Development Process

 

ONE: Economic Feasibility

The first step of raw land development is to determine its economic feasibility. Like any real estate investment, it’s critical to determine your desired return on the property before getting started. This is important because it will not only lessen the uncertainty of the market, but it will also provide a model of the costs versus profit aspect to your investment. Although the numbers will simply be an estimate, understanding these numbers can be tricky. With our experience, we can inform you about hidden costs or surprise expenses.

TWO: Acquisition

Once we understand the costs were likely to encounter—including what we should receive in return—we can better determine the offer price. It’s important for investors at this stage of the process to have contractors submit actual bids for the project. This will not only provide estimated costs for the project, including the numbers of what you’re expected to spend, but also a max offer price. With in-depth market knowledge and research, we will ensure you are not overpaying for the site.

THREE: Zoning

Depending on the type of property you’re looking to construct, or how you intend to present the property to buyers, zoning will play an important role in how you proceed. Zoning codes will essentially determine what types of properties—whether single-family, multifamily, condominium or commercial—can be built on the lot. As an investor, this could ultimately hinder your investment approach. When getting started in raw land investing, it’s vitally important to understand the zoning laws in the area. We will help to understand these laws and also facilitate meetings with the city to ensure a smooth rezoning if needed.

FOUR: Financing

Like all real estate investments, the way in which you intend to use the property will dictate the type of financing you obtain. The one aspect investors should care the most about is the loan-to-cost ratio (LTC). In essence, the LTC is the amount of money the lender will provide for the project, which will generally depend on the type of construction and use of the property. Although the majority of lenders will only provide a percentage of the overall costs (generally between 80-85 percent), owner-occupied homes are eligible to get standard bank financing. We will introduce you to industry-leading lenders and financiers to ensure you are receiving terms satisfactory to you.

FIVE: Construction

The second-to-last stage of the raw land development process is construction. In most cases, this will consist of horizontal development—like grading for roads, curbs and utilities—and eventually building the property from the ground up. One element investors also need to be aware of is the construction financing aspect of the project. Generally speaking, contractors will be paid in increments of duties performed, including phases of the project. In many cases, construction lenders will hold back approximately 10 percent of the construction loan until the project is completed. Usually pre-sold units will help to expedite the release of monies from the lenders. We will help with the design of the project to ensure it is attractive to our target audience.

SIX: Marketing

The final step to the land development process is marketing with the help of our project marketing company, Evernest. This is where stage-one is of critical importance. Researching the neighbourhood, the market price, and absorption rates will pay off when determining your marketing strategy. We will take care of the branding, marketing, signage, press releases, launch events, the presentation centre, and reaching out to our widespread network.

 


Frequently Asked Questions

What is the future development potential of my property?

Have you seen higher levels of construction or any notices of rezoning in your mailbox? If so you may have a property with development potential!
City officials and staff are excellent resources to find out the future plans for your neighbourhood and property. We are consistently communicating and networking with city officials in Surrey, Langley, and Delta, therefore, we are able to share that knowledge with you. We never want to be behind the curve, so we rely heavily on research and make sure we do our homework in order to provide you with thorough advice and the most accurate pricing. We have been advising on all aspects of land for 15 years and are experts at identifying scope for development. Once we have cast our professional eye we are then in a position to advise you of all of your options so you can make an informed decision on the next step forward.

What does zoning mean?

Sometimes you will hear the phrase, “what is it zoned for?” or “what’s the zoning on this property?” Those are really questions about what the land can be used for according to the City in which the property is located. Some areas are strictly permitted for single-family homes and nothing else can be built on those lots, whereas other areas are more forgiving and different mixes of buildings can be built. Zoning regulations can be specific or loose depending on the area. Typically, cities have what is called an Official Community Plan (OCP) which indicates what the city officials envision the future development to look like. This OCP is constantly changing and is not set in stone.

How does a land assembly work?

A land assembly is simply the joining of adjacent lands to make a larger parcel. This is normally done so that the larger parcel can accommodate the building of more living units (be they houses, townhouses, low rise or high rise condominiums). Selling as part of a land assembly usually means that the vendor will get a much higher price than he or she would on a one-off sale to an individual buyer. The assembly process is tedious and lengthy. Usually, after we have assembled enough properties to create value in the eyes of a developer, we then approach said developer. The offering process, subject removal, deposit dates, and completion dates can be widespread depending on the development. With our expertise, we will help you negotiate and secure a contract which provides you with favourable terms and conditions.

How are development sites marketed?

You may be wondering why you don’t see ads or flyers for large development sites. This is due in part to the majority of development sites being sold off-market or as what’s called an “Exclusive Listing ”. Even though the site is not published on the MLS, a good realtor will provide marketing services such as drone videos with information and information packages with images and stats for the area. We here at Sukh Brar Real Estate Group provide drone cinematography with motion graphics, digital and hardcopy information packages, publishing on our website, and when possible 3D modeling and massing of the future build.

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