How do I properly evaluate land for new construction?

1 Reply

I posted this in the new construction forum but got no feedback so I figured I would try here. I have a pretty solid foundation with rehabs as well as how to research plats, home owner records and lien records but no experience with new construction. If I am evaluating land/lots for new construction what is the ideal scenario.........I guess what I am asking is I understand how to evaluate and do my due diligence with rehabs, but am a bit lost with land/lots. This is what I have gathered so far in regards to single house land/lot development......


-Check with the city to see what the property is zoned for and check buildable space. Also check for set backs, landscaping, curb, utility issues and any other requirements for building with the city. Also check all permitting fees.

-Research utilities and see if the power, water and sewage hook ups are close by and what the cost would be. I would avoid well and septic properties so don't worry about those hopefully.

-Check HOA codes if it is in a HOA development.

-Check flood, wetland, toxic waste and endangered issues. What other issues could be a problem?

**Ideally if I can find a tear down that has the proper existing setbacks, foundation and utility hook ups than that would be ideal to save from a lot of these pre-construction costs, right? .

Is this pretty much on the right page in doing due diligence for development and how do the more experienced developers evaluate lots/land when it comes to wetland, toxic waste, endangered species or other issues? The first 3 seem pretty straight forward......that last one seems to be a burden. What are possible "out of the norm" requirements that could prohibit development and how does someone research every possible scenario (rain run off, endangered species, toxic waste, special requirements that make it not buildable, land lock, wetlands, etc.) quickly and inexpensively?

Much depends on your end use scenario. If you are building for resale value, then you will want to find locations that are suitable to your target buyers. Local or online Federal flood maps will tell you if you are in a flood zone. Online resources provide by the state should be able to indicate if the site is contaminated. Most of the time you can visually see if the property is part of wetlands. If you are connecting to public water and sewer, then a perk test is unnecessary. If there are other homes nearby, that should be a good indicator that there are no foundation issues.

Tear downs have a lot of other considerations. Usually the foundation is not reusable due to age and demolition damage. Older homes may have demolition issues having to do with asbestos etc. Even the utility connections may need to be replaced. If considering this, make sure that the price of the lot equals the lot value if vacant less the cost of demolition and hauling and even filling in the foundation if required.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you