Home Development on Open Land

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I thought I'd tap into the forums and ask about a real-estate situation that seems to come up more than once, in Los Angeles. I'm an Architectural designer, and soon to be licensed architect, and I'm shopping around for some open land in L.A. My dreams are noble and simple, not very risky (maybe). My dream is to eventually design and get a home built for myself.

But Finding open land in LA feels like walking through a field of land mines. Most plots of land that are cheap enough to purchase look daunting. the terrain is less than Ideal, although views are gorgeous. Local Planning commissions in these hillside neighborhoods are notoriously difficult and lengthy to approve plans. Luckily, time is on my side, and I'm not intimidated by the design and permitting.... I know not to expect full approvals and entitlements in less than a year.

In searching for land, I discovered that nearby new construction projects were purchased as "shovel ready, ready to issue." It seems as if, for a couple of these new projects, someone went in, hired an architect and possibly an expediter, and got the entitlements/ permits for these projects. They then turned around and sold the empty plots of land to investors that did not want to go through the headache, nor did they want the risk, of waiting a year to receive approvals for their investment. I'm also aware that it's difficult to get a construction loan on an empty plot without approved plans. So small investors with some money, looking to borrow and invest, are shut out automatically up-front.

My question is, for all you investors out there that are daunted by the upfront investment ...... would you be more willing to invest on a shovel-ready property? If a developer offered to sell you land with all required permits, and possibly some bids from local contractors, would you be willing to buy? What if the developer is also an architect, willing to work with you during the construction process?

And finally, is this a typical service that's offered to investors? If so, pardon my ignorance!

I have seen this often. A few of my clients are lend investors who get the property what they call "Vertical Ready" Then turn around and sell the entitled lots off to end developer. So from the stand point of how typical it is... i have seen it done quite often. Also the end developers in most cases are large corps .. it cuts down on their risks and keeps raw un-entitled land off of their books