Do you have clients sitting on undeveloped properties? Or maybe you have clients looking for undeveloped properties? If you do, then they will eventually ask you when and if they should subdivide or develop that property. When they do, it is critical that you slow down and NOT answer that question too quickly.  There is a lot of information and fact gathering that must occur before you answer that question.

Here are my top 11 things that every homeowner who is considering developing must know.

1. LOCATION –Land itself, even without a home on it, can be a good investment. The challenge is determining the true value by evaluating potential use and demand.  Location is paramount in determining value.  Tiny little houses in the middle of bustling downtown neighborhoods can sell for top dollar due to the supply of land in that area.  A large lot that can be subdivided into two lots can also sell for a pretty penny.
2. ZONING LAWS – The value of land is impacted by zoning laws which determine what you can and can’t do with the land. Your client must check current property zoning regulations for their piece of property. Pay attention to the county’s long term land use plans and scheduled road additions as these are indicators of future growth.
3. HOMEOWNER ASSOCIATIONS – Is the developable land in a subdivision governed by a homeowner’s association? If so, check the rules of what can be built and if there are restrictions regarding footprint, size, or style.  Also make sure that you read EVERY page of the HOA’s regulations around new home builds as you could be in for a surprise if you don’t.
4. COSTS TO DEVELOP LAND – There are many costs to consider when developing land and many people that own a piece of land that could be developed don’t realize that they have to incur those costs up front. Make sure you have they know this before they ever agree to develop.  title insurance.
5. ORDINANCES AND COVENANTS – Most land even when it is being subdivided may have some form of a restriction. There may be deed restrictions which are private agreements created between the owner and the buyer of the property. You may also have ordinances which you must adhere to from the local city or county.
6. UTILITIES – There will be costs to bring utilities to the property including electricity, phone lines, water and sewer (if available). If public water and sewer is not available, you will need permits for drilling a well and for installing a septic system.
7. ROAD ACCESS – This is one aspect that is easy to overlook. The gravel path the property came with may not work as a permanent driveway which could drive up the costs to put in a proper roadway or access road. Verify the road you see can indeed be developed as a permanent path.
8. EASEMENTS –Be aware of every easement on the property and understand what the easements mean for the use and enjoyment of the property.
9. SURVEYS – A survey will show you exactly where the property boundaries are as well as elevation possibilities for building. Never rely on an old survey – it may be outdated.
10. FLOODING – You will need to know this to determine whether or not flood insurance is needed.
11. PERMITS – Unless you plan on camping in a tent on your new piece of land, make sure you secure a permit for all improvements.

Developing land without doing your homework can cause your client to encounter more frustrations than they ever bargained for. It is important that when anyone asks you if their property is develop-able, you are ready with the information they need to make an informed decision. Do your homework. Show them this list. Then, let them know that answers to these questions are critical in determining whether or not the property can be developed or subdivided. Armed with this knowledge, you will both be equipped to take the next steps together.

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