Layout Designing and Development
- Acquisition of land with the intention of constructing utilities and surface improvements
- Reselling some or all of the developed sites to project developers or in case of housing to home builders.
Key criteria for land development business:
Before proceeding with development, however, there must be evidence that the project is possible or that market acceptance of the final product (single-family home, office, warehouse, etc.) is highly likely. This step is important, regardless of whether the land developer is a developer of the final product or not.
In other words, in the land development phase, the developer has to understand and understand the demand for the final product (or products in the case of mixed-use land development). For example, economic drivers may change land use for residential, industrial or commercial development such as office space in Bangalore.
In developing residential land, firms specializing in acquisition of raw land in suburban fringe areas and developing sites for single-family-separated units or locating sites for multiple uses such as single-family units, multifamily apartments and cluster housing are common. is.
Based on the market segment in which the end use will likely sell, the land developer
Occupies the ground
Develops a land use and traffic movement plan
Builds roads, lighting, and subsurface improvements (utilities, drainage, sewage)
The developer then splits individual sites, and sells the smaller site to builders and project developers.
If the site has an appropriate highway boundary, the developer may also place some retail sites for sale later.
Land developers are usually willing to sell sites to other project developers, as long as those project developers follow the necessary development controls. These controls typically include adequate quality, maintenance, landscaping, and construction of similar buildings. These controls are usually specified in deed restrictions and / or provisions in the contract governing the operation of a business park owners association.
Many land development firms typically exist in a given urban market.
They enter the market for raw land by contacting landlords or land brokers and obtaining information about the land available for sale.
These developers engage advisors to conduct market studies for the end uses that will eventually develop and the price range for each use.
The developer then completes an initial land plan, estimates the land development cost, and analyzes whether the path can be purchased and developed profitably.
In many cases the developer is more of a facilitator of the development process than a firm that performs all the necessary functions in the land development process. Many tasks can be done by consulting firms (land planners, civil engineers, and landscape architects) and contractors (roads and utility construction companies).
In these instances, the developer owns the land, receives the necessary financing, and implements the overall development plan, but cannot appoint an employee who is directly involved in the construction or design. The developer must negotiate with the public sector authorities for necessary project approvals and zoning changes and, if necessary, and then market sites for developers and / or builders to project.
Acquisition of land – use of the option contract
The developer usually negotiates an option contract because it takes time to complete various tasks and activities before actually deciding to buy the land. Some of these activities are:
Site inspection, preliminary market studies, preliminary cost estimates, soil studies, engineering, feasibility, evaluation, and design strategy, bidding and / or negotiation with contractors, planning for public approval, planning for financing.
The duration of the option can be very short (one month for small residential land development) or as long as 3 years or more (regional shopping center)
Financing and development
While financing the land acquisition and development process, a number of structures may be available to the developer.
The developer can buy land for cash. The developer can then obtain a loan for the cost of improvement and interest bearing.
The developer can buy land only by making a down payment. The seller finances all or a portion of the land sale by withdrawing the purchase-money mortgage from the developer. The developer then gets a loan for improvement only. The seller of the land (mortgage) agrees to subject the lien represented by the purchase-currency mortgage to the development loan, and the developer repays the seller’s funds as the parcels are sold and made after payment on the development loan Go.
The developer buys the land by making a down payment of the land and obtaining a loan based on a percentage of the appraised value of the improvement of the land. The funds pay the seller and construction improvements.