Getting Started with Residential Land Development
There are those of you who would like to pursue land development, but you lack the knowledge and courage to do so. I’ll try to help you learn a little more about it with 3 basic tips. The courage part is something you’ll have to work on yourself. Get some guts dude!
- Discuss Financing Options with Banks, Brokers, and Private Lenders
It’s common practice to have a discussion with a bank before buying a car or house. This helps you figure out what you can afford. It also helps you understand the shopping process and what you need to do to secure the loan. The same applies to pursuing a land development project. Find out how much money is needed for a down payment and what loan terms are available. This will help you understand what types of projects will work for you. You will also know if you need to bring on any partners. This takes us to tip number 2.
2. Find Some Partners
Don’t let greed get in the way of bringing the right partner into your project. You’re likely to lose a lot more money with ‘rookie mistakes’ than you would lose by sharing the profit with a good partner. I use 3 different types of partners to do development projects.
- Private money lenders will loan the money needed for the project and have some advice or resources that will help you.
- Joint venture partners are also a great option. They invest their own money and can offer expertise and effort.
- Other investors and developers are important if you want to pass on the project for a finder’s fee.
3. Find Some Property
As with most real estate, a good real estate agent can be helpful in finding the right property. Search the MLS or websites like Redfin.com for properties that are oversized compared to the surrounding properties. These are the types of properties that can be subdivided into smaller lots. You can also drive around your local market and search Google Maps for oversized properties.
Go through these 3 steps and start finding some development opportunities. You can learn and network while you go through the process. Peace be the journey.