How to Underwrite 20 Acres of Raw Land

[Will Parks]

Anyone in the Dallas Ft Worth area developing 15+ acres of land, how do you evaluate an opportunity? Is there anything in particular about land development that might be different in Dallas than other surrounding areas? I know utility access is a big consideration, I would think having city utilities nearby would be a plus. And zoned appropriately for what you want to do with the land.

[Kristi Kandel]

Quote from @Will Parks:

Anyone in the Dallas Ft Worth area developing 15+ acres of land, how do you evaluate an opportunity? Is there anything in particular about land development that might be different in Dallas than other surrounding areas? I know utility access is a big consideration, I would think having city utilities nearby would be a plus. And zoned appropriately for what you want to do with the land.

1. start with identifying WHAT can be built on the land by checking the zoning. This link has examples of zoning designations and examples of zoning summaries for other properties. https://docs.google.com/spreadsheets/d/1gDqtsWHaEbOZ-ZVnzc-0...
2. Assuming this is raw land you'd be looking at greenfield development, subdivision (where you could be the master developer and sell to a builder for the actual housing/structures), or full blown SFH / Multi-family construction. (all terms are googleable)
3. Once you have determined the TYPE of development then you can work with an UW (you can DM me for the person we use) to UW the development project based on your exit strategies and that will tell you if you have a deal or not. You can check this link for information you'd need to provide the UW to complete their work: https://docs.google.com/spreadsheets/d/1W-_HfZv8XdtvmYAJ94gz...

Development has many nuances but it is not just for the professional developer. My team is launching a development 101 course in Q1 2024 to help empower our local developers with the tools and resources you need to be confident that you can actually be your local developer in your community and to provide you with the necessary education, tools, resources, etc. to take your first deal start to finish. 

• Subdivision: divides up one piece of land into smaller pieces or lots to be developed or sold. Lower cost & time for development to increasing land value along with multiple exit strategies. HOWEVER, proper due diligence is key to ensure the strategy can be executed.
  • Average timeframe: 1-2 years to complete development cycle
  • Risk: minimal for existing conditions but need to ensure there’s a need for this type of housing stock in this market
• Residential: Used for living purposes & developer must make sure the demand is there for the product type (ADUs, SFH, condos, townhomes, multi-family, assisted living, communal living, etc.)
  • Average timeframe: 1-2 years to complete development cycle for smaller projects & 2-5 years for larger scale
  • Risk: minimal for existing conditions but need to ensure there’s a need for this type of housing stock in this market