When you’re searching for parcels to develop, you’re actually looking at “pairs.” Each pair consists of the parcel and everything that’s in the immediate area. So you should be scrutinizing not only the parcel you’re thinking of buying, but the characteristics of the properties nearby. When you select a parcel, therefore, you must be willing to accept it, warts and all. Frequently, these “warts” consist of the property’s setting.
The surroundings of a proposed real estate development are cast in stone. You cannot change them, and you cannot divorce them from the parcel. As you’re initially looking at individual properties to buy, you should visualize a set of scales. The subject parcel is on one side and its collective surroundings are on the other. If you really like the property but really hate its setting, you would be wise to cross the parcel off of your list and move on.
The third article in the Land Development Values series introduced the concept of “noxious neighbors,” i.e., uses that could be clearly seen, smelled or heard that would have a negative impact on the value of your proposed land development. Unfortunately, not all noxious neighbors are easy to detect. One reason for this is that property uses nearby may be in a state of transition. What appears to you to be an open field may in fact be a parcel undergoing a change to a use that could be detrimental to the value of the real estate development you want to do. Be a ferret. As you’re evaluating individual parcels and their respective surroundings, proceed on the assumption that what you see does not necessarily match the reality.
When you’re deciding whether or not to slap the label of “noxious” on a nearby property, put yourself in the shoes of the ultimate user of the parcel you want to buy. The users would be home owners for residential land developments, tenants for multifamily properties, and business owner tenants (or purchasers) for retail and office developments. Ask yourself: would I want to put my business (or live) near this other property? Your goal as a developer is to transform a parcel into something that you can sell for a profit. Therefore, you must always keep the target market in mind. Although your initial buyers may be builders, their target market is the ultimate user of the property. Builders thinking of buying your parcel will evaluate it and make their purchasing decisions in the context of whether the finished product (e.g., house, apartment complex, office building, retail center) will be perceived by the ultimate user as desirable.
How can you determine the true nature of the surrounding properties? Review the updated zoning map and ordinance and verify with the municipal zoning officer what the current zoning classifications are for the neighboring properties. Go to the municipal office and ask to see the list of pending petitions for rezoning, applications for land developments and subdivisions, and requests for variance. This is public information (although some municipalities may subject you to convoluted administrative procedures designed in large part to discourage frivolous requests for information). Determine if any of the properties on the list are located near the parcel you want to buy. “Near” is a relative term. It can mean walking distance, viewing distance or five streets over. It all depends on the type of change being proposed for these properties.
If there is a match, ask to review the file of the particular property (this may trigger another administrative procedure you’ll have to follow). Hopefully, you’ll be given the file and ushered to a place in the municipal office where you can sit down and go through the file’s contents. In addition to writing down basics (address, parcel identification number, block, lot, contact information for the applicants and their representatives), take note of the title assigned by the municipality to the application for the property. For example, the municipality may refer to the property as “John Smith Subdivision” or “Candlewood Knoll.” If you know the title being used, you will be better able to track the progress of the property’s application when you read the minutes of public meetings of the municipal governing body, planning body, or zoning hearing board. Official actions taken should be reflected in resolutions adopted or decisions announced in minutes and other municipal documents which you are entitled to see.
At last, there is a resource for people interested in buying or selling land. Check out Nancy Chadwick’s real estate investing and land development guides, articles and books at http://www.LandBuyingandSelling.com/
Tags: buying land, land, land development, real estate development, selling land
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