Land developing

7 Replies

What are your thoughts on property development for quick profit or using it as a high performance property (rentals)

Danny, I was searching for forum for thoughts on land developing and saw this. Did you move forward with developing?

I'm in a market with very low inventory and lots of demand so starting to explore the idea of buying land and building rentals from the ground up. Is this what you were thinking of doing?

I would recommend if you have never developed before to be very cautious. Developing a single lot vs. multiple lots is also a very big difference. In a single lot it may take several months to get permits, your permitting/design costs can run in 10's of thousands. If it's a subdivision you may have to put in roads, fire hydrants. Water/sewer connections, storm water facilities and permitting can take over a year. I would never consider new construction "quick". Unless you are very experienced, you would not be able to get something built in under a year.

Developing raw land into a subdivision whether resi or commercial etc..does not = quick.

as stated above depends on the jurisdiction.. In Oregon we are at 24 months or so from start to building the first home. some times 18 months.

in Ca your at 24 to 48 months  depending...

short plats ( 4 lots or less ) generally can be run in 12 months or less.

Does it look reasonable cost wise to develop 3-10 acres - let's say 5-20 duplexes or 3-10 fourplexes?

@David Light  Developing land may seem simple, but there's a lot more to it than most people realize. However; I'm sure that Texas is nothng close to California in difficulty getting things through. Here in California, anything over 4 lots is considered a "subdivision" and would need to get State approvals. You want to check the laws in your state governing subdivisions. 

Texas may not take as long to go through the approval process for a larger development, but you need to find out in order to make any decisions on which is the best option. 

On the other hand, if you want to just get a larger parcel and "four by" it, keeping it under the subdivision limit (again, speaking of California as that's what I know) then it's getting a Civil Engineer, drawing a map and submitting to the Planning Department for approvals. A Civil Engineer will be able to tell you what will be required in the way of utilties installations, curb, gutter, sidewalk, fire hydrants, etc.

Once you have all that information, you will be in a better position to move forward.

If you're not experienced, you definitely want to find someone that has done it before and can manage the project for you, as any mistakes can be very costly.

In hot markets, there's probably developers out doing the same thing, and land will be hard to find. Tying land up and reselling might also be another idea, but again, you need to understand the costs to develop in order to price the property right and not so high as to price out builders. Good luck! 

Karen Margrave thank you for the tips. If I did anything it would be small and sounds like best if I partnered with someone that had experience. Currently it's just a dream and I'm starting to learn about it. I appreciate your advice. Thanks!
Originally posted by @Karen Margrave :

@David Light  Developing land may seem simple, but there's a lot more to it than most people realize. However; I'm sure that Texas is nothng close to California in difficulty getting things through. Here in California, anything over 4 lots is considered a "subdivision" and would need to get State approvals. You want to check the laws in your state governing subdivisions. 

Texas may not take as long to go through the approval process for a larger development, but you need to find out in order to make any decisions on which is the best option. 

On the other hand, if you want to just get a larger parcel and "four by" it, keeping it under the subdivision limit (again, speaking of California as that's what I know) then it's getting a Civil Engineer, drawing a map and submitting to the Planning Department for approvals. A Civil Engineer will be able to tell you what will be required in the way of utilties installations, curb, gutter, sidewalk, fire hydrants, etc.

Once you have all that information, you will be in a better position to move forward.

If you're not experienced, you definitely want to find someone that has done it before and can manage the project for you, as any mistakes can be very costly.

In hot markets, there's probably developers out doing the same thing, and land will be hard to find. Tying land up and reselling might also be another idea, but again, you need to understand the costs to develop in order to price the property right and not so high as to price out builders. Good luck! 

 I'm in Southern California the Riverside area to be exact.  There are 1000's of left over home sites all over our area from 2007 that were approved but not build on.  

We are looking at unincorporated areas of the county where small subdivisions where approved and abandoned only to by purchased by a small operator.  I have found a couple that the present owner would like to have me test the water by developing the market.  

I understand he will sell the same home I'm building for more money but I don't care I just want to get my hat in the game.  Caution is good, but I'm looking to cut as much time out of the process as possable.  

You never know the person selling me the sites may like not taking on more risk and sell them all to me.  In the late 90's I had a friend do 3 homes that he bought the dirt for a lady that had 75 home sites.  He ended up doing all of them...... a man can dream!!

Join the Largest Real Estate Investing Community

Basic membership is free, forever.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.