Predevelopment costs are often the biggest obstacle for a new developer getting started. The process of getting a site approved and built-ready often costs $200k - $1M +. That is “at risk” capital that you don’t get back if the project doesn’t start. Fortunately, if you get the project moving, you can recoup those costs through the construction loan. But if you don’t, you are on the hook. Proceed carefully. You’ll incur architecture, engineering, environmental, legal and city submittal fees at a minimum. On many project there are many more. Experience to navigating the process and not spending money at the wrong times is crucial.
Kyle diPretoro
10mo
Spot on. It’s critical not to just throw money at all the due diligence right out of the gate. Be intentional. If the area is known for tough soils, get the geotech first. If you have reason to believe the site might have an environmental issue, get the Phase I done first. Etc!
As an architect, I always encourage clients—especially developers—to get in touch as early as possible. The sooner we talk, the better. I offer low-cost feasibility studies to help clients move forward with confidence, sometimes even before they purchase land. Too often, I’ve seen people spend money engaging the wrong parties at the wrong time, only to realize the project won’t work. Early collaboration with an architect or site planner can save time, money, and headaches later on.
Seth Ellsworth
10mo
Alternatively, investing in more capable and creative A/E teams can add more value to the development, sometimes even making the difference of a project moving forward. It cuts both ways. Saving money up front could cost you a lot more later in the project. The disconnect is that "later in the project" is usually somebody else's money.
Landon Odom, P.E.
10mo
Well said — and one area that’s often overlooked is how much of those predevelopment costs are tied up in over-designed civil plans. Too many new developers believe the plans are as efficient as they can be once their permitted and can’t be changed which isn’t true. We’re here to help lower those costs. #OdomVE
Bryan Baire
10mo
Tying a piece of land up with a real estate contract isn't that expensive. It's the consultants required to do DD that cost so much on the front end. I've always said that if I could come up with $300k I could make millions with the knowledge I have after 25 years in the land development game.
Dario Loureiro
10mo
From experience, predevelopment is where you really learn the weight of every decision. It’s a phase that tests your strategic thinking, risk tolerance, and timing. Knowing when to hold back and when to invest can make or break the project before it ever breaks ground.
2K followers
10mo100% often timing purchase to close while completing pre application processes all the way to preliminary plat is a careful science and art. Living in Montana we are often fighting against the 4 seasons and changing climates for construction and prime selling time. If you get it wrong these can be insanely costly from lost up front costs to delay in building causing you to carry the loan with no progress😬