What You Should Know Prior to Starting a Commercial Land Development Project
Posted on: 12 December 2019Share
Commercial land development is a popular real estate venture due to the high returns that you can reap when executed properly. However, any commercial project can pose a high risk to you if you do not know the ins and outs of the process. When it comes to developing land for perhaps office premises, residential units and so on, you must ensure that you are protected from litigation and potentially losing your entire investment simply because of not going through the proper channels.
With that in mind, there are several things to consider before you embark on a land development project for commercial purposes.
1. Delineate a clear intention for the development
It is easy to be carried away with the world of opportunities available to you once you have a lot that you are capable of developing. This is how some individuals end up failing because they have no aim in mind. Firstly, you need to know what you will be doing with the property so that you can establish if your plan is feasible. Secondly, knowing whether your proposed development project will be feasible or not gives you a chance to revise your plan of action. Thus, before taking the first steps into the development process, you should establish what your primary intention with the project is.
2. Determine the potential drawbacks of the lot
The second consideration that you should bear in mind before commencing on your commercial development project is the possible shortcomings that the land will present. A newbie mistake that some investors may make is to focus their attention on all the positive characteristics of the lot without factoring in how the drawback may affect their development plans. For example, you could be thinking that building apartment units with a swimming pool will increase the profitability of your commercial project. But if there are zoning restrictions in place or easements, you will have to compromise on the elements that would have lured potential residents. Overall, ensure that you have conducted a thorough assessment of the potential and shortcomings of the lot before your final decision on what the project will entail.
3. Discover potential incentives for developers
It is not surprising for the local government to have incentives in place for developers in an attempt to have more people invest in the local real estate and improve the environment. For instance, you could be eligible for a tax reduction for your planned development project if you choose to install solar panels rather than rely solely on electricity. Ensure that you consult with your contractors and project manager so that you can make the most of existing incentives.