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WHAT TO CONSIDER WHEN SELECTING LAND FOR A CONSTRUCTION PROJECT

WHAT TO CONSIDER WHEN SELECTING LAND FOR A CONSTRUCTION PROJECT

As a property developer, you are probably always in the market for land. It goes without saying that unless you have land, you cannot even begin to contemplate developing it. Although you may want to search for a plot of land for a particular project you want to develop, there are several factors to consider when you set out on your search for the right land at the right price. Here are some tips to help you in your quest.

Clearly define your intended use

Before setting out to find land for sale, you need to have a clear picture of how you intend to use that land. Are you going to develop a commercial residential property? Perhaps you have been asked to find suitable land for a manufacturing concern. You may want to have size in mind as well. Not all parcels of land will be large enough to accommodate your project and others may be too large with no hope of subdividing. Clearly outline as many requirements as you can before you look for land for sale.

Be familiar with factors that affect price

In real estate, location is always a key factor in price. Also, land use classifications will also be important factors. Land is often priced on potential use along with location, so do keep that in mind. For example, consider a plot that is classified for commercial use and is situated right outside the borders of a metropolitan area with a high rate of unemployment. A client wants you to develop land for a factory they want you to build, and this would be ideal. There is huge potential in a piece of land like this, so that may weigh heavily on the asking price. Or, perhaps you see that there is a shortage of housing in the city so you want to buy land to build a commercial housing project. Location and intended use are huge and both will factor heavily into price. That’s almost guaranteed.

Begin with an offer to buy

If you are working through an estate agent, have them draw up an official Offer to Buy which will be submitted to the current owner. This type of document will state conditions such as if the necessary surveys meet your needs. A topographical survey is always recommended because it goes beyond plotting out boundaries. Other features such as any structures on the land, and various site features above and below ground. Also considered in a topographical survey would be such things as spot heights of adjacent plots of land.

You will also want at least one of the important environmental surveys because that particular plot of land may be home to an endangered species of wildlife. As a developer, you know the types of surveys pertinent to each situation, so don’t forget to include those as conditions for solidifying a purchase contract.

If you work through an agent

As mentioned above, if you are working through an estate agent, they should be the liaison between you as the property developer and the current owner from whom you would like to purchase land. All sorts of legal issues can arise if you decide to deal directly with the owner. With that said, often it is preferable to work through a real estate agent because they may have other properties listed that would work as an alternative if the current bid fell through.

Just as you know the property development industry inside and out, they know real estate equally well. If you want a stress-free contract and transaction, it is best to let the experts handle all those potentially troubling details for you. You wouldn’t ask the agent to pick up a hammer to help with construction, so likewise don’t get in their way when they are working for you!

How to find the owner if the land isn’t listed for sale

Many times, you will find plots of land for sale if it’s listed with a local agent. These are typically the easiest to find. However, there may be times when you’ve spotted a piece of land that you feel would be ideally situated for the project you have in mind. You might be successful with an internet search or by querying a neighbour or business nearby but there are other ways to find out who exactly owns that land. Have you ever used the HM Land Registry? The land in question may be listed there along with any other details such as use and previous owners. It’s worth a try at the very least!

How much are you willing to pay?

We have mentioned price in passing, but it can’t be overemphasised just how important price can be in today’s market. If it’s a seller’s market, then you will be ready to pay a higher price than if there is an abundance of properties with few buyers. This becomes a buyer’s market, and you are likely to get the best prices under these conditions.

However, do you see potential in that land? Maybe you are able to get it at a relatively low price that can yield a high ROI if you are able to hold onto it for a bit of time. When it comes to land for commercial property development, the Return on Investment is of ultimate importance. A retailer, for instance, wouldn’t resell products for the same or lower prices than they paid to a distributor, and so it is with commercial land and property development. 

After calculating exactly what you can afford to invest along with factoring in all your sources of funding and financing, you will have a clearcut idea of just how much you are willing to pay. That’s not only the bottom line but also one of the most important factors when making the ultimate decision on whether or not that particular plot of land would be a good investment. As a commercial property developer, this really does need to be your main concern, so keep that in mind.

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