Buy Land for a Profit

1. Buy unimproved raw land for inventory without designs or approvals.
purchase available land at below market prices
prepare site analysis to determine future problems limiting development potential
complete yearly site assessment to ensure regulatory changes do not impact development potential i.e. master plan changes, zoning changes, changes to uses of adjacent properties, etc.
end user is anyone from anywhere

2. Sell unimproved raw land with approved plans and permits
read my White Paper on the Future of Land Development Part I - a discussion on the alliances which will be forged for future real estate development projects
remember - anyone can enter the land development field
prepare site analysis, marketing and project feasibility studies
obtain regulatory approvals and permits
end user: developer, builder, builder/developer, government

3. Sell approved and improved right of way
business plan of a “developer”
requires substantial cash flow & bonding capacity - will be difficult in new era of real estate development practices
design to permit product flexibility
requires covenants and restrictions to protect integrity of the project
design project in phases to limit cash flow and control absorption
developers shift as much cost on to the lot purchaser
infrastructure phases will permit reductions in performance bond amounts prior to completion or obtain maintenance bond status quicker
develop infrastructure
sell lots so that the end user will make a profit and be consistent with the market
end user are homebuilders, individual homeowners, commercial builders

4. Construct Infrastructure and build/sell homes, lease retail, rent apts, etc.
business plan of a “builder-developer”
market sensitive - location, location, location
follow market study but be flexible in market changes - reaction is critical
determine special market segments
end users are individual home buyers for residential, office tenants, renters of apartments, retail commercial, industrial users, etc.

Real estate development is a risk-reward business and will continue to be for those seeking to use land as a business profit center. Next week, I will emphasis rezoning for value.