Like almost every area of our lives, the COVID-19 pandemic brought turmoil to the real estate market. But residential real estate endured.
In fact, 5.6 percent more homes were sold in 2020 than in 2019. And although commercial real estate development has shifted somewhat, it remains one of the most lucrative investment sectors in 2021.
Real estate developers have a lot to consider when planning a project. With so many moving parts, it can be easy to overlook important parts of the process. But simple oversights can cost thousands or even millions of dollars in lost revenue or even lawsuits down the road.
While you cannot predict pandemics there’s still plenty you can plan for to help ensure that your project is a success. Here’s a simple checklist of important steps to take during the acquisition and construction processes.
Real estate developers must determine if the site is properly zoned for the intended development plans. Be aware of all local zoning restrictions and allowances particular to the neighborhood and your type of project.
For instance, housing overlay zones can include exceptions for residential development. These include things like increased building heights or lower parking requirements. Knowing these specifics could have major impacts on your projections and plans.
Determining the most advantageous use of the property is a central part of real estate development. It’s important to have a grasp of what the demand is for particular projects in the area and to gauge competition.
Market factors can impact your timeline. For instance, you may decide to continue development but hold the property until the demand for your type of development improves. Such timelines need to be forecast from the outset.
Be sure to get documentation that details the condition of the existing structures and surrounding area. Surveying may be enough to meet legal requirements. But be aware that outdated topographical maps may not reflect current conditions on the property.
Find surveyors who will give you the most detail. For instance, the use of drones for surveying is becoming popular for getting an accurate, digitized look at a property.
Titles, Utilities, Permits, and Easements
Ensure that the title on the land is clear. You want to make sure that your project is not interrupted by tax liens or other legal judgments. Be sure that you have documentation of recent tax payments and existing agreements, like leases or easements on the land.
Confirm with local agencies that you have access to utilities. You may need to do construction on existing service roads for public water or sewer access.
Develop a relationship with a reputable, local attorney to make sure that all the legal aspects of your projects are in line. Hire a prominent real estate firm, like Lees & Lees, that specializes in real estate transactions. From drafting a property agreement to negotiating permits and waivers, they can help you stay on task and schedule.
Due diligence does not end once you buy the property. Document the conditions of the land, buildings, and underground utilities before construction begins.
Continue to document (including photographs) throughout the development process. All of this could help demonstrate subcontractor work and protect against future claims.
Resources for Real Estate Developers
Now that you have an idea of what steps you should take to ensure that the real estate development process runs smoothly, you can be confident in the decisions you have to make about prospective projects.
We hope this checklist for real estate developers was helpful to you. Be sure to check out the wealth of sales and marketing information we have for urban and destination developers.