for Ray - Developing a plot of land - Posted by Joseph Zimny

Posted by Dan on October 29, 2003 at 13:49:37:

Was/is it farmed? Will probably need at least a phase 1 pesticide

for Ray - Developing a plot of land - Posted by Joseph Zimny

Posted by Joseph Zimny on October 27, 2003 at 24:07:46:


My wife and I are about to become trustees of a land trust owned by my grandmother that will charge us with developing a parcel of 10 - 20 acres of land in Sonoma County, California (north of the Bay area). And although we have extensive experience in investing (financing, buying, selling & managing existing property), we have never developed a raw site before. Obviously, we will be seeking in-put from many different sources. The land is zoned for residential development.

My questions for you are very general in nature. Is there a planning document, flow-chart or checklist that we can make use of that will spell out in rough but clearer terms the developmental process? How do I ensure that I’m not missing something BIG while trying to get my arms around what will likely be a series of smaller projects rather than one big project? What is your advice for experienced investors who, unintentionally, are faced with this situation?

best regards,

Joe Zimny

Re: for Ray - Developing a plot of land - Posted by ray@lcorn

Posted by ray@lcorn on October 28, 2003 at 08:58:17:

Hi Joe,

David’s post below sums it up well. The project will be defined not by your wishes, but by the zoning and subdivision ordinances that apply to the property. And you’re talking about CA, which means there will likely be extra layers of regulation. You’ll need to do some research on the generic standards applicable to the project before getting to specifics.

But before you do anything you’re going to have to nail down the actual parcel size. 10-20 acres is quite a range, and the use, density and development standards will change with the size of the parent parcel.

If after reviewing the ordinance and development standards it seems the project may be economically feasible, then my next step would then be to engage a local engineering firm and ask for some limited take-offs on several development scenarios. They can give rough estimates based on any degree of information, but be aware that the less info they have, the rougher the estimate. What is needed is a survey, topographical mapping to at least five foot contours (two is better), knowledge of utility availibility and cost, and the development standards. That gets you a ballpark estimate of the hard development costs. Soft costs include the cost of funds over the carrying period, legal fees, marketing expenses, sales commissions, and a contingency fund for the unexpected (which is to be expected).

Once the ballpark costs are known, then some market feasibility work is needed in order to develop the timeline for the project. The projected absorption rate will lead to phasing and staging strategies.

For a great text on the development process, I recommend “Real Estate Development and Workbook” by Howard Zuckerman.

As to what I would advise for someone faced with this situation… whether experienced or otherwise, you have to evaluate the feasibility of selling the project before construction. Understand that you don’t necessarily have to be the one who builds the project in order to profit from it.

There is great value in removing the unknowns in the development process. The wild card in development is that unless you have the approvals in hand, the final build out value cannot be known. That risk is what often keeps raw land raw. Eliminating that variable adds the greatest value to the raw land for the least (relative) cost. If you can obtain approvals for a specified number of units developed in a specified manner, then the costs can be known and the end project can be offered to local developer/builders for completion.

I’m an experienced developer, and have sold a number of projects before turning a shovel of dirt. In fact I’ve bought parcels knowing that I could get a plan approved and then sell the property as an approved project. Engineering and design work take place indoors, away from weather, construction risk, market meltdowns and all the other risks that line up at a developer’s door.


Re: for Ray - Developing a plot of land - Posted by David Krulac

Posted by David Krulac on October 27, 2003 at 18:45:32:

check the archieves here.

there are many things that you need to check like:
permitted uses
needed variances
water/sewer capacity
utility availablility
perk tests
engineering reports
wetland delineation
stream crossings
highway permits
steep slopes
environmental hazards
historic designations
development moratorium
endangered species
and my persoanl favorite deep pockets

you need professional, expert help from an engineer and surveyor and need to know the local coded backwards and forward, even better than the zoning officer. And you need to check with the local and county planning offices.

That’s all you need to do,

David Krulac
Central Pennsylvania