How to Advise a Developer on a Purchase of Land
Land acquisition is a highly profitable investment that carries an even higher risk if not properly planned. Advising developers on the purchase of land requires an in-depth knowledge of the land-development process. Knowledge of developing raw land, various types of land development, project coordination and the potential risk involved are key components in advising a prospective buyer in purchasing land.
Although purchasing land can be risky, proper strategic planning and the guidance of a knowledgeable advisor can yield the developer a great profit.
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Instructions
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How to Advise a Developer on the Purchase of Land
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Identify the growth potential for the land the developer is interested in purchasing by researching the economic and projected population growth and employment trends in the area. You will also need to study specific communities and neighborhoods to determine where exactly growth may occur.
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Once all of the necessary research has been completed it is time to negotiate terms and conditions for land acquisition, and there are two primary ways to proceed: purchase the land in full or sign an option-to-purchase agreement, which allows the prospective buyer to remit a nonrefundable deposit to purchase the land on a set date at a predetermined price.
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Develop a plan for the land based on the research you have done about the way the area will develop, taking into account schools, hospitals, subdivisions and malls that are planned for the area.
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Submit the proposal to the appropriate city, state, county and federal governments to gain necessary approvals, also known as the entitlement process.
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Tips & Warnings
Be prepared and patient. Raw-land development projects take an extensive amount of work and can span a year or many years to bring to fruition.
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- Photo Credit Shandell Williams
