Land Development Process
- Karlen Beitman
- May 9
- 6 min read
Developing land is an exciting yet intricate process that transforms raw, undeveloped spaces into thriving residential, commercial, or public hubs. Whether you’re an aspiring developer, a property owner considering your options, or simply curious about how landscapes evolve, this blog post breaks down the essential steps and key considerations involved. From initial planning and zoning to construction and final approvals, we’ll guide you through every stage of the land development process to uncover what it takes to bring bold visions to life.
What is Land Development?
Land development is the process of transforming raw or underutilized land into a space that serves a specific purpose, such as residential neighborhoods, commercial centers, parks, or mixed-use developments. This process typically begins with identifying a piece of land and assessing its potential, taking into account factors like location, accessibility, zoning regulations, and market demand. Once an opportunity is identified, developers move into the planning phase, which involves designing the project, obtaining necessary permits, and collaborating with architects, engineers, and local authorities. Effective land development requires a blend of vision, strategy, and compliance with legal and environmental considerations, ensuring the final outcome meets both community needs and regulatory standards.
What is the Land Development Process?
The land development process involves a series of well-defined steps that transform raw land into a functional and valuable property. Each step is carefully planned and executed to ensure compliance with regulations, maximize usability, and achieve the project’s goals. Below, we outline the critical stages of this process.
1) Economic Feasibility
The first step in raw land investing is figuring out if it’s worth the investment. Just like any real estate deal, you need to know the kind of return you’re aiming for before diving in. Why is this so important? Because it reduces the guesswork and gives you a clear picture of your investment’s potential- balancing costs against profits. While the numbers will be estimates, understanding your project’s feasibility- like expected costs, revenue, and overall return- sets you up for success and helps take the uncertainty out of the market.
2) Due Diligence
The second step of the land development process is to conduct due diligence. During the due diligence phase of land development, it's important to analyze factors like location, zoning, access to utilities, necessary permits, and environmental concerns.
Location: Be sure to familiarize yourself with the area surrounding a property of interest by evaluating key factors such as visibility, access to major highways, proximity to established commercial hubs, and the overall health of the local economy.
Zoning: Zoning codes are essential in shaping the types of properties that can be built on a specific piece of land, whether it’s single-family homes, multifamily units, condominiums, or commercial buildings. For investors, these regulations can have a significant impact on your investment strategy.
Access to Utilities & Infrastructure: When evaluating a real estate investment, consider access to utilities and infrastructure like water, sewer, electricity, and public transportation. Properties with easy access to these services are more desirable, increasing their value. In contrast, properties in areas with limited or unreliable utilities may need extra investment to attract tenants.
Permits & Approvals: Before any development can take place, investors must secure the necessary permits and approvals from local government agencies. This process can be complex and time-consuming, so it’s important to thoroughly research the requirements for your specific property before making a purchase.
Environmental Concerns: Raw land investments are often located in rural areas with diverse landscapes and wildlife. As such, it’s crucial for investors to consider any potential environmental concerns before purchasing property. This could include studying soil composition, checking for wetlands or protected species on the land, and assessing any potential contamination from previous industrial use.
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3) Acquisition
Once you understand the costs you’re likely to encounter- including what you should receive in return- you can better determine the offer price. Investors need to have contractors submit actual bids for the project at this stage of the process. This will not only provide estimated costs for the project, including the numbers of what you’re expected to spend, but also a max offer price. Acquiring land for development typically requires coordination between multiple parties, including lawyers, sellers, and financial institutions.
As with any real estate investment, your intended use of the property will determine the type of financing you need. A key factor for investors to consider is the loan-to-cost ratio (LTC), which represents the percentage of the project’s total cost that a lender is willing to finance. This ratio often depends on the type of property and its intended use. While most lenders typically fund 80-85% of the total project cost, owner-occupied homes may qualify for more traditional bank financing options.
4) Pre-Construction
You’ve acquired your commercial land after thorough research and careful selection. Now, the steps you take in this phase are critical to ensuring a smooth construction process. Here’s how to proceed:
Planning: Whether you’re preparing parcels for sale or building a commercial or industrial property, you likely have a clear vision for your project. This is the stage to bring in architects and engineers to refine that vision. Work with them to create a detailed plan and establish a realistic schedule. Once your plans are finalized, you’ll need to seek final approval from the local government to move forward.
Site Preparation (Horizontal Construction): Before construction begins, the land must be prepared. This includes tasks such as leveling uneven terrain, stabilizing slopes and topography, and addressing any potential land challenges. Additionally, utilities like water, electricity, and sewage must be installed during this phase to ensure the site is ready for vertical construction.
Selecting a Contractor: After finalizing your budget, securing financing, and preparing the land, it’s time to choose a commercial general contractor. Carefully vet potential candidates to find one that aligns with your project’s needs.
Permitting: With your plans and preparations in place, it’s time to secure the necessary permits for construction. If permitting was researched during pre-development, this step should be efficient- simply check items off your list and obtain the approvals you need to break ground.
By following these steps, you’ll set the foundation for a successful project and stay on track to bring your land development vision to life.
5) Construction
Once the foundations are completed, the construction of facilities and buildings begins. This phase typically involves building structures according to the architectural design plans, which may include commercial, residential, and industrial constructions. Additionally, quality checks and adjustments are performed to ensure that the constructions comply with project specifications and meet required quality standards.
Planning and preparation are essential to the success of any land development project. However, it’s important to recognize that adjustments may be necessary along the way. This isn’t a reflection of the commercial construction process itself- it’s simply the nature of the journey. And remember, always be prepared for those crucial inspections!
FAQ's About Land Development
When it comes to land development, there are often many questions that arise throughout the process. From understanding zoning regulations to navigating permits and inspections, the path can seem complex. To help clarify some of the most common concerns, we’ve compiled a list of frequently asked questions to guide you through each step with confidence.
How Much Does Land Development Cost?
The cost of land development typically averages around $35,000, though it can vary greatly, ranging from as little as $2,000 to as much as $150,000, depending on several factors. On average, you can expect to pay approximately $3 per square foot for the process, which includes clearing, grading, and preparing the land for construction. The largest expense in land development typically comes from labor, which is closely tied to the local cost of living. In areas with a higher cost of living, particularly near major metropolitan regions, labor costs tend to rise accordingly, leading to higher overall development expenses.
How Hard is Land Development?
Developing raw land is no small feat. It requires considerable time, effort, and meticulous research- often exceeding the demands of traditional residential real estate investments. Yet, with careful planning and preparation, transforming raw land can become an incredibly rewarding venture.
Can You Develop Land on Your Own?
You have the freedom to use your vacant land as you wish, provided it complies with zoning regulations and environmental laws. However, if you plan to build, you'll need to obtain permits and create detailed plans. It's a good idea to consult a real estate attorney beforehand to ensure a smooth process.
Find Vacant Land for Sale for Development on LandApp
LandApp simplifies the process of finding and evaluating vacant land for development. With an intuitive interface and advanced listing filters, you can browse a wide variety of vacant properties for sale tailored to meet your needs. Each listing on LandApp's marketplace is embedded with proprietary value and risk index scores, giving you a clear picture of the land’s development potential and associated risks. Additionally, every property includes detailed data points, such as zoning information, environmental considerations, and market trends, allowing you to research potential properties efficiently and make informed decisions with confidence.
