Land Development Model
Accordingly, the capital budget may reflect the cost of all of the components of final land value. These might include the costs of obtaining approvals carrying costs, such as interest and operating expenses, property taxes, landscape maintenance costs, etc. and land development costs. Land development costs must sometimes be allocated between the costs of developing a particular site and those attributable to a larger project. For example, in a large scale Planned Unit Development (PUD) or New Town, land development costs may include townwide costs, sector costs and subdivision costs, in addition to those attributable to a particular lot. In addition to roads and utilities, the cost of amenities and common facilities may be included as land development costs. As noted above, the land and acquisition cost budgets may include both actual historic costs and proposed future costs. Additional land parcels or buildings may be acquired land development costs may be needed and substantial...
Most levels of government that have control over land use adopt subdivision regulations or land-development ordinances. These regulations are different from the zoning ordinance or master plan but may be adopted or periodically revised along with those two documents. You may want to find out in your state who adopts and enforces subdivision regulations. I give you some important information about particular aspects of subdivisions that may be on an exam.
Dedication is a term used for a specific type of transfer of property from an individual to the government. Dedication typically refers to the process by which a developer transfers ownership of the lands that are needed for roads, sewers, waterlines, and other utilities to the government as part of a land development. A person who subdivides a large piece of property into smaller residential lots for sale may build the roads as the individual lots are sold. At some point, the developer turns over title to the government, creating a public street. Dedications may also include easements that the municipality may need, such as for getting to a drainage ditch for maintenance. (Check out Chapter 8 for more about easements.) Individual property owners (as opposed to developers) can also dedicate land to a municipality, such as land for a road to allow access to a town park.
Each year the federal government (in addition to HUD VA) sells all types of seized and surplus real estate, including homes, apartment complexes, office buildings, ranches, and vacant and developed land. Among the most active sellers are the Internal Revenue Service (IRS), Government Service Administration (GSA), and the Federal Deposit Insurance Corporation (FDIC). On occasion, you can also find properties offered by the Small Business Administration (SBA). Although space here doesn't permit full discussion of each of these agencies, you can locate their properties and sales procedures at the following web sites
Many land development projects, which include everything from building a single house to a major shopping center or multi-lot subdivision, impact the environment. The impacts are usually proportional to the size of the project, but a small project can have a large impact if it's built on environmentally sensitive land, such as a single-family house built near a wetland. (You can read about wetlands in the sidebar Why would you want wet land later in this chapter.) In this section, I discuss the primary ways that environmental engineers, scientists, and planners examine the impacts of such projects.
The site is large enough so that 13 parcels of additional undeveloped land on 13 acres can be developed in the future. The development shows that even when existing design is considered obsolete, it does not exclude modernizing possibilities. For example, rather than viewing the existing high-bay, dark building as a disadvantage, the developer converted the space into innovative office and light industrial spaces. The developer also emphasized a coordination between design, marketing, and development rather than treating these aspects of the project as distinct from one another. The fact that this is a multi-functional office industrial project on a large area not to mention expansion possibilities on an additional 13 acres 25 is a good example of how an obsolete facility can be converted into a viable, modern investment.
In this Part II, we will build on this base, extending our financial analysis tools to include discounted-cash-flow analysis and accounting. Our primary focus will be the various forms of financing used in real estate. Cases will include both urban and suburban land development settings. Part II begins with an introduction to the sources of financing for real
If a community wanted to reduce the tax rate, it could encourage development to increase the denominator or the total assessed value. That would result in a lower tax rate. Of course more developed land will result in greater budgetary requirements, so it wouldn't be a direct reduction in the rate. As an example, if the city encouraged and received another 50 million in assessed value through additional development, the tax rate would go down to 2.2 if there was no increase in the budget.
We had one client who applied these principles and ended up with a 1 million deal. He really liked to travel to New Mexico. Knowing that he had to look at real estate to deduct his travel expense, he set up a meeting with a local real estate agent to review land development opportunities in his vacation spot. He ended up finding a deal that netted him 1 million. And, of course, he got to deduct his travel expenses.
One of the advantages of having a friend like Mel is that I get to find out where the next growth areas are going to be. Being a land developer, he is operating three-to-ten years out into the future. Not only do his developments expand the city, Mel and his high-profile team are responsible for bringing new life back into downtown urban areas. Have you ever been driving around your city or town and passed by an open field and wondered if that field might be the only undeveloped land in the area I asked myself that question many times, and actually found it
BINGO The light went on that someone had been assembling these larger properties. I went to the address on the tax rolls and found out the entity was a land development company in town. Furthermore, I read in the paper that this land development company had just signed the Ritz Carlton and was going to announce a resort hotel development shortly Thanks to the information from my title company, I now knew that I was just about to close on a piece of property that the land development company needed to complete the assemblage for their planned resort development. After I closed on the house, I set up a meeting with the development company and subsequently sold them the property for 375,000. A whopping 150,000 more than I paid for it On top of that windfall, I negotiated free rent to live in the house for one year. Remember what wise old Ben said Diligence is the mother of good luck.
As with self-storage investments, you can hold mobile home parks for cash flow until more intensive land development becomes profitable. It's also common practice to delegate day-to-day management to a park tenant. Typically, park tenants are always looking for ways to make extra money.
In the commercial, industrial, and land development sectors, the picture will be very different. Construction lending will continue to be the province of commercial bankers with the organizational capability to control construction and credit risks. Construction lenders will continue to re-
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