Going through the approvals process for a proposed commercial property is comparable to — and sometimes worse than — going to the dentist. It is, however, necessary to determine the real estate feasibility of your project.
The process’s sole purpose is to obtain the right to develop or redevelop the property in the manner intended by obtaining government approvals for zoning, design, and use.
Here are tips to get you started, your land shovel-ready, as quickly as possible.
Take the initiative
It includes understanding how to identify risks before purchasing unknown land. Investing in and developing unclaimed land is extremely dangerous. However, collaborating with the right developer relies on their expertise and thorough investigative approach to mitigate that risk.
Part of the planning includes estimating that the entire process will take 3-12 months or longer, depending on the circumstances.
Another way to get a head start is to become acquainted with land entitlement’s current challenges.
Recognize Each Step
Although it varies by municipality, the typical entitlement process necessitates the submission of a formal proposal, conceptual design package, technical, environmental, and other relevant studies.
These documents are being cross-referenced with the local planning department’s current zoning regulations, codes, and laws/initiatives. It is also tested for any potentially harmful environmental effects.
Finally, the local community must be informed so that residents can provide feedback and address their concerns. In this situation, politics can either help or hurt your case. In this situation, politics can either help or hinder your case.
It is critical to recognize that the main challenge of entitlement is the emphasis placed on the effort to capitalize on the remaining land supply.
Essentially, the formula is as follows:
PRICE OF LAND (land prices) + VALUE OF PHYSICAL FIXTURES + VALUE OF LEGAL USES = ACTUAL VALUE OF THE LAND
Risk Reduction
There may appear to be a few factors over which you have control during the entitlement process; however, there are some steps you can take to reduce your risk level. Investigate the needs, desires, and vision of the city or district in which the property is located.
Is there, for example, a general plan or any other type of development plan that you can find? Examine some similar previous projects in the area that were approved and denied. Discover why.
Take it further by determining which politicians or community groups could impact the project’s outcome. The community and its leaders should then be involved in economic development. Seek agreement from those who agree and learn the reasons for those who disagree.
Consider partnering with a preferred developer, so the entitlement process does not feel like “pulling teeth” to get through. The entitlement process requires experience and the right team to successfully navigate through any political issues, bureaucracy, and negotiations.
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Come join us! Email me at mark@dolphinpi.us to find out more about our next real estate investment.