Having a press for new homes in the united kingdom, investors are looking at raw land for development. The acquisition period should include a comprehensive research. Landman Services Canada
When investors look at raw land for its development potential, it can be an fascinating process. But part of that excitement could mean moving fast when the ability is there – faster compared to a competitive investor might be able to do.
A factor that necessarily slows this process – to good effect – is credited diligence. This is the necessary probe into undetectable and potentially problematic features of the property. All of us do not buy automobiles without a test drive and a thorough inspection of the automobile, inside and out. Precisely the same can be said, writ large, on the acquisition of property.
The fundamental review of the due diligence process should include the following characteristics of the proposed land acquisition:
– Physical – Precisely what is topographically amenable to development, including subterranean barriers (rock that is difficult to dig deep into, for example), slope, wetland presence, archaeological features and potential toxic contamination? As well, a boundary survey must establish these topographical features and if any set ups improperly encroach on others’ land.
– Legal – Besides evidently established subject, any existing covenants, tutoriaux and rights-of-way should be uncovered in the anticipated diligence process. Zoning and site plan approvals also are critical and can sometimes be “deal breaking” considerations.
– Financial – Price and value of a property are not always the same thing. For the investor, it’s about buying low and advertising high, so in the pre-purchase phase a reasonable look at both parts of the equation is crucial to the complete enterprise.
– Sustainability – Properties’ durability performance is about more than “doing the right thing, ” however that is still a fine motivator and the one which can favourably impact the close to future marketability of a property. Nonetheless it can also affect the property’s economical performance in rental progress, duration to let, downgrading and the time required to sell the property. Of note, residential and some commercial built properties place high values on sustainability features, while some “green” scenarios can be a poor fit with professional development.
– Cultural – How will this land transaction affect the surrounding community? And of equal importance but a slightly different question, how will the community see that it may affect them? Creation always means change, and change generally meets level of resistance. That said, advocates for affordable housing have found be advocates for development, alleviating the outsized demand with an increased source, which tends to lower prices.
From there, the investor can determine exterior factors that determine the land’s potential investment performance. This may have little related to the land in its current state and much more to do with external variables: the potential for use re-zoning (amenability to change on the part of local planning authorities), the market needs for housing, and the monetary equations under which homebuilders in the area conduct their business. Land that cannot be re-zoned, developed and re-sold is not land that is attractive to most investors with mid-term goals (i. e., to make back their investment with progress in two to five years, for example).