Government employees in land development, zoning, planning, building and pretty much every other department you as a land developer need to get approvals from have a tremendous amount of power. They can deny a permit, delay it, or make the requirements of receiving that permit so expensive or so impossible that it makes a project not worth doing.

I have even been involved with situations where two agencies refuse to issue us permits until they see proof that we have already obtained permits from the other agency.

In other words, the building department will not issue you a building permit until you provide proof that the water department has issued you a water permit. But the water department has stated they will not issue you your water permit until you provide proof that you have been issued a building permit.

It can be a “hair pulling out” gauntlet of inefficiency at times.

Many agencies have goals of how fast they should process a permit. But during the boom times, when agencies were swamped with applications, we watched as these goals quickly went out the window and processing times got longer and longer. A permit that in 2003 took a month to get, at the end of 2006 took 3 to 6 months to receive.

Part of that is understandable, but what is remarkable is how little processing times have improved since the bust. Even though the workload is drastically reduced, the time to complete it has not followed suit.

Parkinson’s Law states that “Work expands to fill the time available for its completion.” That appears to be what is happening today. Rather than reducing the time to process permits, government employees are filling that time with more work (i.e. more comments for plan reviews, more nit-picky requirements, more requests outside their authority.)

The impact of this is added expense to the land developer. Engineers, Architects, Surveyors, and Attorneys are the ones handling these extra comments, requirements, and requests, and they are turning around and billing that extra work to you!

You now have a situation where your land development team is taking just as long to get a project permitted as if it was 2006, but they are doing a lot more work on that permit than they normally would.

As a land developer you need to be aware of this change, and make sure your cost and time projections account for it.

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Existing housing sales are up across the board.  Nearly every state, city and MSA are showing an increase in sales compared to this time last year.

This is good news.  Yes, there are a lot of foreclosed homes and short sales that are contributing to the sale numbers.  But the sooner those houses are off the market the sooner standard market forces will apply.  (Some would argue that standard market forces apply no matter what type of sale it is.)

Most economists agree these statistics are encouraging but they are quick to point out that they do not expect a sharp turn upward anytime soon.  Many feel that housing numbers will bounce around for a while creating a bottom and only then will a significant uptrend in sales and home valued begin.

But for those looking to buy land and develop it, a bottoming in the housing market may be all you need to start tying up land again.  Lead times on residential real estate developments of any decent size are taking 1 to 2 years to get permitted and completed and so a bottom here could be an uptrend by the time your product comes to market.

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The county where my office is located, Brevard County, Florida just announced a moratorium on transportation impact fees. The reason – to help stimulate the local economy. Or in the official language of the new ordinance,

… the Brevard County Board of County Commissioners has determined that putting its citizens back to work is a high priority for every level of government, including county government; and …

… the County Commission has determined that the removal of certain regulatory and economic impediments to new commercial development is one way in which County government can join the State and Federal government in strategies designed to stimulate the local economy…

This is a big deal. My firm is often involved with property developers who are forced to pay transportation impact fees that exceed $1 million dollars.

Reducing the cost of a project by that amount is no laughing matter, and it would certainly make some projects financially feasible that weren’t doable without the savings.

If that is the case, maybe Brevard County will succeed in “putting its citizens back to work”.

Do you have land development projects in your area where the waiving of impact fees would make them profitable? If so, and even if not, you might want to let your local government agencies know about what other counties are doing to spur growth.

Cities and Counties are much more willing to adopt changes when they know others have done it as well. A simple letter or email linking them to Brevard Counties website may be enough to save your next project tens of thousands of dollars. (Here is the link, http://www.brevardcounty.us/landdevelopment/).

But please remember, just because it may make your property developments cheaper to build, that doesn’t mean there is now demand for what you are building. Do your research first.

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What’s holding your Real Estate Development Success back?

Most likely, you are in the same boat as developers I deal with all the time.

You’re as close as you’ve ever been to a successful project…You can see it right there, just a few inches from your grasp…

You can practically TOUCH it…

Except for one thing.

There’s a wall between you and your well-deserved achievements. And that wall has been plaguing your real estate business since you first decided to venture into this arena.

You know what I’m talking about. Every time you seem to spot an opportunity…every time you get just a little taste of what could be…

That wall pops up and says, “Hello there–it’s me again, ready to find a problem that will stop this deal dead.”Sound familiar?

Yeah, me too. I’ve wrestled with my own roadblocks in the past–more than I care to remember.

And each time, it seemed to get harder and harder to overcome those barriers and move to the next level.

But I wanted to tell you about a resource that can help you get past that.

It’s a free report written by a guy named Rich Schefren.  Now Rich isn’t a real estate developer.  He is a successful businessman that started out in retail clothing and now is considered one of the best in the world of online marketing and business management.

And he’s whispering 2 words in your ear:

“Swing away”.

https://schefren.infusionsoft.com/go/sept08/Bart/

Rich’s new report, “The Uncertainty Syndrome,” takes on the biggest problem marketers and business builders have: overcoming adversity and explains how and why you need to just go for it.

Now this report is geared toward online business people, but I just read it and virtually everything in it can be applied directly to real estate development.

It is amazing how much setting up a successful online business is similar to completing a profitable real estate project.  After all, the web is literally virtual real estate that you develop to its maximum potential.

Every website is a piece of property and a successful online venture requires you to;

• Reasearch and Determine Demand,
• Conduct Due Diligence and Assess Feasibility,
• Design and Construct the Project
• Market and Monetize the End Product

Sounds familiar doesn’t it?

Well, for the past year, Rich has been researching like a madman, trying to find the secrets of getting past the roadblocks that online real estate developers have.

And in this report, he’ll outline key strategies and tactics you can use RIGHT NOW to virtually obliterate whatever’s holding you back–and advance your business to where it should be.

How does that sound?

https://schefren.infusionsoft.com/go/sept08/Bart/

Rich’s reports are legendary in the online marketplace for delivering outstanding content that’s straightforward, to-the-point, and leaves nothing behind.

And while, they aren’t focused on real estate development, they easily cross over and are worth your time to check out.

Bart

For those of you who don’t know, our office is located in Melbourne, Brevard County Florida. 

This is the exact location where Tropical Storm Fay decided to take a bit of a rest and dump massive amounts of rain down onto the homes and businesses in this area.

Tropical Storm Fay was an extremely rare occurence.  The rainwater that was seen in some areas most likely will not be seen again in my lifetime.  And even though, this was such a major event, the majority of homes in the area were not damaged by the storm.

In fact, I have only heard of one location where new subdivisions received flooding damage.  And the rumor is this was caused by a blocked culvert from an offsite canal and not from poor design of the stormwater system in the subdivisions.

So, how does this impact your future developments?

Well, common sense would tell you it shouldn’t.  But reality often doesn’t involve common sense.

Do not be surprised when government agencies create new requirements and stricter design parameters for your developments in the future.  Cities, Counties and Water Management Districts will use Fay as an opportunity to put more restrictions on development.

This will most likely result in larger stormwater treatment areas for your real estate developments.  Meaning your land will have less developable area. 

Less developable area means less profits. 

So if you are purchasing land in the near future in Florida, be aware of any new stormwater requirements that you may need to meet.  

You may want to offer less for that property.   

This implementation of new requirements is not restricted to Florida.  Practically every location has natural weather conditions that can create drastic changes in property development requirements. 

Most likely these are issued through the building code, but as in the case of Tropical Storm Fay, these requirements will be felt in the site design.

 

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We get emails of development questions nearly everyday here at PropertyDevelopmentSource.com.

The questions come from all over the country, and it is clear after having read so many of them, that many of these questions are actually stopping potential development projects dead in there tracks.

Many people are simply stuck, unable to take the next step because they lack the information they need to take action.

That’s a big deal. And so we do our best to get these people the answers they need. But as much as we try to answer them, it has become obvious that many of the questions are the same. So we put together a report that covers the TOP 6 questions we received.

The result is:

 

“The Big 6:

Answers to Developer’s Top

Questions that Hinder Success”

This extensive report gives detailed, from the trenches, answers
  to questions like;

• How do I get good cost estimates for evaluating potential
    projects?
• How do I get financing for my project?
• How do I hire the right team for my project and how do I
    manage them
• What percentage profit should a project provide to make it
    worth doing?
• What development fee should I charge my partners or investors?
• And finally, how do I get a reasonably accurate feasibility study without
    spending thousands on consultants and reports?

And we don’t stop there. After putting together the report, we realized that unless we include the tools you need to properly answer these questions, the report is incomplete.

So we included valuable spreadsheets and checklists to help you keep making progress and taking action.

If any of these questions, or something similar is stalling your real estate development plans, please check out THE BIG 6, here

 

THE BIG 6: Answers to Developer’s Top Questions the Hinder Success

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Many developers have been on the sidelines of late waiting for the credit crunch and property prices to stabilize. But not everyone is scared to enter this market. Many think now is the best time to buy property they have witnessed in 20 years.

A recent article in The New York Times addresses that very issue. (Sure, Land Is Cheaper. So Is It Time to Buy?)

I agree with the New York Times article that there are some great opportunities in the marketplace right now. What I fail to agree with is the approach the article seems to condone.

The article is focused on land banking instead of property development. Land banking is where you purchase a property with no intention of developing it. You simply are holding it with the hope that it will appreciate in value.

Personally, I think land banking can be much riskier than actually developing the property. With property development, you first recognize a demand for a certain product in the marketplace (office space, apartments, medical, etc.) and then you develop a piece of property to meet that demand.

With land banking, there is often no real plan of what the end strategy is going to be. That’s very risky. If you don’t have a good idea why your property is going to appreciate in value, and how and when you are going to sell and recover your return on your investment, then you are just gambling.

I have been around the development industry long enough to see how quickly permitting requirements and building codes can change. Many of these changes can have huge impacts on the value of your property.

The longer you hold an undeveloped piece of property, the greater the risk that a change in permitting, codes, or zoning will negatively impact your property.

Wouldn’t you rather get the property developed as quickly as possible and avoid such risks?

Now is the time to be looking to buy land – but only if you can develop it into a marketable product today.

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As a developer, you are required to make hundreds of choices over the course of a development project. From what architect to hire, to how much to spend on landscaping, to what price to sell your end product, the developer makes countless decisions every step of the way.

The stress of these decisions can build up fast. One thing that may help you eliminate some of the stress, clear your head and help you make better choices is to understand what you are really doing when you make these decisions – choosing whether to buy down risk or not.

A story will help explain this better:

A few years ago, my father was developing a subdivision of single family homes. They were in the very early stages of the project and he had hired a geotechnical firm to take some soil borings for use in designing the roads and the storm water detention pond for the project.

The geotechnical firm had put together a proposal for the bare minimum of soil borings – a few for the road and just one for the detention pond. The price was right and so my father gave them the go ahead.

The geotech firm conducted the soil analysis and found sand or sand with traces of clay from the top soil to down well below the water table.

No surprise there as sand is common throughout most of Florida. So the engineer went about designing the road and stormwater pond for sandy soils and the project moved ahead as planned.

It wasn’t until they were nearing the end of construction that problems started showing up with the stormwater pond. The engineer had designed a dry pond for the subdivision. (A dry pond has no water in it except during storm events where it fills up with water and then the water percolates into the ground over time. Usually within 3 days the pond should be dry again.)

Well, the subdivision had experienced a good rain storm about a week prior and the pond was still full of water. It hadn’t drained like it should have. Then another rain storm came and the pond was overflowing and water was flooding some of the new lots.

Quickly my father was on the phone with his engineer. And shortly after the engineer visited the site, he was on the phone with the geotech firm.

Long story short – the geotech firm ended up taking some more soil borings and discovering that the pond had been located over a significant layer of clay soils. The initial, single boring in the pond area had just missed it.

The stormwater pond had to be redesigned and reconstructed resulting in tens of thousands of dollars in additional costs and project delays.

Looking back, my father realized that he had made a poor decision when choosing to go with the bare bones geotech analysis that was proposed.

He had subconsciously made the decision to take on more risk for the hope of increased profit. If he had taken the time to consciously look at that decision as one about risk, he would have made a different choice.

You see the majority of costs for hiring a geotechnical analysis is in the mobilization of the equipment. Once you have paid to get the boring equipment to your project site, the cost of an extra soil boring or two is minimal – usually a few hundred dollars.

The risk my father chose to take was a significantly greater uncertainty about the geotechnical features of the property. And he exchanged that risk for the chance of only a few hundred dollars extra in profits.

If only he had looked at the decision from the standpoint of risk, he would have seen the bargain in paying only a few hundred dollars to buy down his risk significantly.

He learned the lesson the hard way. Hopefully, you won’t have to.

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The Property Development Process can be difficult to map out because every project is different. Property developments don’t happen in the same steps or order every time, and in certain cases some steps may not happen at all.

But for those just learning about land development, an overview of the most common tasks can be very informative. For that reason, I have created a simple video that walks through many of the steps in a real estate development. (The video is located here,

Property Development Process Video.)

The actual process map can be downloaded in .pdf form here, Property Development Process