How to find investors for land developing

Question

How do you go about finding an investor to partner with on new development? I have an option on an off market 34+ acres and the sellers are asking $680k. We can get about 27-30 lots in the development and the estimator believes our all in cost per lot will be $60,000 assuming we have to do sidewalks and green space. A neighborhood that just recently built out down the road did not have those requirements which would get the number down below $50k a lot. These lots when finished would sell for around $100k per lot with the average home sale being $650k+. Having all the information about the development, how do you go about finding an investor to partner with on the development?

Jay Chang · Answer

Finding investors for land development can be a difficult but necessary aspect of the project's success. Here are some steps to take to locate investors for your land development project:

• Create a Detailed Business Plan, Start by creating a comprehensive business strategy that details your land development proposal. Include details on the project's location, market analysis, project scope, deadlines, budgets, and estimated returns on investment (ROI). Before investing, investors will want to see a well-thought-out plan.
• Identify your Target Investors, Determine the type of investors you want to attract. Do you want to attract individual investors, real estate investment groups, venture capitalists, or private equity firms? Your decision will be influenced by the size and scope of your project.
• Network Within the Real Estate Industry, To meet possible investors, attend real estate conferences, seminars, and networking events. Building industry relationships might help you identify investors interested in land development projects.
• Use Online Platforms, Connect with possible investors who might be interested in your project by using internet platforms such as LinkedIn, real estate investment forums, and crowdfunding websites. Look for local real estate developers who have done similar projects in the past, but I recommend getting the deal under contract with a due diligence period, so you can back-out if you don't get the financing needed.
• Engage a Real Estate Broker or Advisor, Real estate agents frequently have contacts with investors. Hiring a reputed broker or advisor might assist you in gaining access to their network.
• Pitch your Project, Make a convincing pitch presentation that highlights the most important components of your land development idea. Highlight the potential benefits, dangers, and your previous experience with similar projects.
• Consider Joint Ventures, Collaboration with other developers or investors might help to share financial burdens and risks while attracting more funding.
• Utilize Social Media and Online Marketing, To attract potential investors, have a strong online presence using social media and a good website. To develop credibility, share your project's progress and triumphs.
• Consider Government Programs and Grants, Government initiatives and grants may be offered in certain regions to help with land development projects. Investigate whether any local or federal initiatives can give financing or incentives for your project.
• Work with a Financial Advisor, Consult with financial consultants that can help you structure your concept in an appealing manner for investors and discover suitable partners.

Keep in mind that locating the suitable investors may take some time and effort. Prepare to show potential investors the potential profitability and benefits of your land development project, and be transparent and professional in your dealings with them. Seek legal and financial guidance as well to verify that your investment agreements and contracts are properly-structured and in accordance with applicable laws and regulations.

Mohammed Rahman · Answer

Hi @Noah McBride - try attending a local meetup and letting people know about the project you're thinking of, that'll give you a direction to aim in.

Kristi Kandel · Answer

Noah the biggest challenge right now with land development is that it's VERY hard to get deals to pencil right now.

The assumption of your plan based on your notes is that: you're planning on subdividing the lots, creating a development agreement with the AHJ for the land, CC&Rs, any necessary utility/landscape/road/streetlight district annexations, building out the master development infrastructure (water, sewer, power, telecom, roads, curbs/gutters, sidewalks, landscape/stormwater detention, streetlights, fire hydrants, driveways, traffic signals, etc.) and then developing each individual lot. To either be a build to rent scenario of SFH or a sell of each individual SFH lot.

Those deals haven't worked in several markets this year even if the land was free. You could consider being the master developer only and doing everything above EXCEPT building the SFH and sell the lots off to a builder. However, you still have a lot of time and risk involved and need to UW that portion of the deal.

Once you fine tune your strategy and have UW that works the investors won't be hard to find. It's getting a deal to work that is going to be your challenge.

Logan Singleton · Answer

Hi Noah,It would first depend on what type of partner you'd be looking for a debt partner or equity partner?

If you're looking for a debt partner I'd be happy to see if I can assist with the acquisition and development costs.

If you're looking for an equity partner attending REIA would properly be the best option since those are people who are already operating in the location

How to find investors for land developing

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