How to find Raw Land and sell Ready-to-Develop directly to the National Builders

How to find Raw Land and sell Ready-to-Develop
directly to the National Builders
“Raw2Ready” Concept

How many of you knew that the National Builders are the biggest and most aggressive land buyers in the US? Did you also know that even though they slowed down, they did not STOP buying land and building homes during the last recession? 

 

That’s right, what you have to remember is the National Builders are institutional companies, their only business is to build and sell homes, they don’t have a “fall-back position”, they have to keep building houses, they have to keep feeding their machine, their machine’s diet: Ready-to-Build, Finish Lots. 

 

There’s another thing, many land investors do not know that the National Builders not only buy Finished Lots; but, they will also self-develop. That means they will buy land that is Approved and  Ready-to-Develop.

 

Let’s face it, there is a huge opportunity to supply this demand, make substantial profits without pushing dirt; without having to  manage additional risk or contractors. I like call it “Raw2Ready”.

 

My Name is David Hansen andI have been doing it for 35 years, first as a Civil Engineer and Land Planner than as a Developer and now I explain it in a video interview from an International Podcast hosted by Rafi Mizrahi.

 
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If you have or found land with Residential Development Potential and would like us to help you develop it, leave your information bellow and we will get back to you

How you can enter the Entitlement and Land Development Space and increase your income with six and seven-figure profits, even without prior experience

How you can enter the Entitlement and Land Development Space and increase your income with six and seven-figure profits
even without prior experience

In 2022, I began exploring the world of Land Entitlement and Development. I had decided to stop pursuing large multifamily deals since the numbers just weren’t adding up anymore. I had already sold my 1,000-unit portfolio and tasted financial freedom with six and seven-figure profits. But what was my next step? I pondered. Should I go back to buying and selling single-family homes? The thought wasn’t appealing to me; I’d left that space in 2017 for “bigger and better things”.. So, what could I do, where could I go and make substantial profits per deal?
 

I did some research and learned from the National Association of Realtors that the U.S. was facing a housing shortage of 5.5 to 6.8 million units, with the gap between supply and demand widening each passing year. 

 

How many of you knew that?      

Mind blown!

Understanding that real estate thrives on supply and demand, I decided I needed to focus on the supply side. So, basically, I had three options: supply newly built houses, deliver fully-developed finished lots to builders, or create fully-entitled land ready for development.

Initially, I considered building and selling houses, but rising interest rates raised concerns about selling them quickly enough. Through my research I discovered that the National Home Builders continued constructing homes, even during the 2008-2010 recession. 

This made me realize that they had the infrastructure in-place to build and sell no matter market conditions, I decided I wanted to entitle and develop land and I needed to find a way to work with them.

 

News Flash: I lacked the experience and knowledge on how to find, entitle, and develop land…

 

As a real estate coach and mentor from Israel, I’ve been assisting Israeli investors entering the U.S. real estate market since 2012. I knew I needed someone who could not only teach me how to find, entitle, and develop land; but, could also guide me through the process and prevent costly mistakes. I spent months searching for a coach or a mentor but found none who could or would be truly committed to my success.

 

Despite these set backs, I decided to proceed, learning as I went, trying to avoid significant and costly  errors. Using the basics I’d gleaned from others, I began analyzing land listings, searching for property with development potential, but I felt lost. I couldn’t find land worth making an offer on, and I wasn’t sure if I was even underwriting the deals correctly.

 

Then, one day, I stumbled upon a piece of land that I just knew had potential. I still had doubts since I’d never done this before, I was aware of the many factors to consider; but didn’t want to make a catastrophic mistake. I decided to consult with a local civil engineer, risk some capital, and see where this effort might take me. I posted a request for a recommendation on a Facebook group, and a seasoned civil engineer, David Hansen, offered his help, FREE.

 

Within 24 hours, we were on a call, and not only did David correct me about the land’s profit potential (around $2.5 million, substantially more than I though), he taught me how to thumb-nail underwrite the deal, showed me a nuance in the Zoning Ordinance that could increase the by-right yield by 3.5x, and I learned more in an initial phone call than in the past five months of trying to figure it out on my own. I offered him a joint venture, he would apply his experience, I would fund the deal, we would share the profits. He also offered to teach me so that I could eventually run developments on my own.

 

Sadly, the deal didn’t go through. At the time we agreed the risk in settling without approvals outweighed the potential benefit of substantial profit. No matter, in a short period I learned a lot from David: proper underwriting, sound negotiating with sellers, management of expenses during the study period, and accurate verification of maximum potential. Not bad for a first attempt!

 

Following our initial experience, we are continuing to work on deals together. David continues to coach me and I him, everyone has a strong suit, no one is proficient at everything. We more have several pending projects with potential for multi-seven-figure profits. David Hansen, with 35 years of experience as a civil engineer and land planner, is my HACK, a virtual key to land development. We’ve partnered to create a win-win situation, I am focusing on finding deals and securing funding while David manages the process. Together, we are a Better Stronger Team.

 

We are grateful to have found each other and we want to help others break into Land Entitlement and Development, perhaps becoming a guide. If you have experience in finding land and want to learn how to entitle and develop it, reach out to us. We would love to help maybe we can become your beacon…

 

Yours,

Rafi Mizrahi

If you have or found land with Residential Development Potential and would like us to help you develop it, leave your information bellow and we will get back to you

Evaluating your land for residential development potential and potential worth

Evaluating your land for
residential development potential and potential worth

Are you an Owner or Land Flipper looking to sell your Land?


Understanding the  residential development potential (If any) will help you determine its value  so you can correctly market and maximize your profit.

Just  this week, a land flipper approached us looking to sell  100+ acres in a large US City. The  offering price was based on  per acre pricing from  similar properties  sold  nearby.
This seller, believing he was   basing his evaluation on   a property with significant residential development potential, simply  multiplied the price per acre by the number of acres  in the parcel. Our quick  evaluation  indicated that 75% of  the property is a Federally Protected Wetland; thereby,  minimizing the buildable area of the property rendering it almost unbuildable.  Bottomline,   the property is worth much less than he thought and now he is struggling to sell it. Remember this tale, it  will come in handy in one of the following steps…

 

So, how can you quickly and efficiently evaluate  your property to determine  residential development potential and determine relative  value?

Thumbnail Research for Development Potential:

  1.  Proximity to services, Development Nearby, Utility Access and Availability
  2.  Adequate Frontage and/or Access 
  3.  Zoning and Future Land Use
  4. By-Right Zoning Density 
  5.  Physical and Environmental Constraints (Flood Plain, Wetlands, Steep Slopes, etc)
  6.  Back-of-the-Napkin Yield Calculation
  7. Back-of-the-Napkin Land Value Calculation

Proximity to services, Development Nearby, Utility Access and Availability

Your goal in this step is to get a general idea  if a property has  development potential and just how much potential. Is it  high, moderate, or low density? You can determine much of this by simply reviewing neighboring properties, their current uses and development status.
This can quickly be accomplished using Google Earth or Google Map in Satellite view.

Analyze these 3 Opportunities:

Opportunity  1:

Obviously rural , surrounded by mostly Forested Recreational Land or Open Fields and Cropland While this doesn’t mean that the land is  unbuildable  it does give you a hint that  the property most likely has low density development potential.

Opportunity  2:

The adjoining   properties are generally rural, some nearby land has developed with residential uses and denser development with access to services appears to be a few miles  away. While   no guarantee, this is a reasonable indication of the potential for Moderate Density Development.

Opportunity 3:

The adjoining properties have been developed into Moderate and High Density Communities. In all likelihood, your property has the opportunity to be planned for Moderate to High Density Development. 

Access and Frontage

Determining if a property has adequate access and frontage is critical to the assessment of Development potential. Without Deeded and Dedicated Access or Frontage on Existing State or County Maintained Right-of-Way a property would be difficult if not impossible to develop. Additionally, depending on the number of potential residential units, most Jurisdictions, primarily in support of Fire Marshal’s Code, will require several points of access. Keep in mind,   multiple points of access are generally required for projects that exceed Fifty (50) Dwelling Units.

 Zoning and Future Land Use

Zoning Designations are Land Use  planning tools utilized by Counties, Cities and Towns to   define what is allowed to be built and where it can be built. Municipalities use these Zoning Designations to aggregate land  into areas of allowable uses that are generally compatible  with surrounding uses.

In order to determine the Zoning Designation on your property, check with the municipality/jurisdiction to determine if the property is within a City or Town Limit , or if it is regulated by the County. Some Cities and Towns could have Extra Territorial Jurisdiction (ETJ) over properties near their borders in which case the property could be subjected to additional regulations and requirements.

Once you have confirmed the controlling jurisdiction, it’s time to find  the Zoning Map, locate your parcel, and find the assigned Zone Designation or District.

But, where do you find the Zoning map?
Each municipality/jurisdiction will provide  access to this information differently; Here’s a couple of ways to get started.

 
Option 1:

Search Google for  the GIS Mapping site for the Jurisdiction.
Search the words {City/County name} {State} GIS map.

Once you access  the map,  locate your property by address or parcel number.

Next, on the Sidebar you should find a selection of Layers.
Select the Zoning Layer and identify the assigned Zoning Designation.

Watch the following video for demonstration:

Option 2:

Go to the Municipality/Jurisdiction Website and find the Contact Information for the   Planning Department.
Email or call  the Planner in charge and ask for a copy of the Zoning Map.

By-Right Zoning Density

Now that you know the Zoning Designation for your property, it’s time to determine what type of development is permitted and how much density is allowed. This information can be found in the Zoning Ordinance,  as Adopted and Amended,  by the municipality/jurisdiction. The Zoning Ordinance is a Municipal Code that outlines permitted uses in the several Zoning Designations. There are several Options for obtaining the Zoning Ordinance or Code.

Option 1:

Search on Google and find the Zoning Ordinance or Municipal Code.
Search the words {City/County name} {State} Zoning Ordinance.

Option 2:

Go to the municipality/jurisdiction Website and find the Planning Department Contact Information.
Email or call the Planner in charge and request a copy of the current  Zoning Ordinance.

Next, Open the Zoning Ordinance and READ. First, read the Table of Contents to find your Zoning District. Once you find your Zoning District, read and familiarize yourself with the Code specific to your Zoning District. Then, locate  the  Uses as assigned to your property. These Uses may be designated as: Permitted, Permitted by Special Use, or Not Permitted.


Many times the Uses will be shown in a Table  like this:

Once you have determined Allowable Uses, search for the Maximum Allowable Density. This information will often be shown as Units/Dwelling per acre or possibly as minimum lot size X sqft, or possibly a combination of both. If the Maximum Allowable Density is described as  “minimum lot size X sqft” , Divide 43,560 sqft (1 acre = 43,560 sqft) by minimum lot size. If; however, the Maximum Allowable Density is described in terms “Not the Exceed “X” Dwelling Units/Acre” then you multiply the “X” by the number of acres. The resultant, in both cases, will be the Maximum By-Right  Density.

For example, here is how it will be shown in the Zoning Ordinance:

Physical and Environmental Constraints

Big reveal; Not all of the Gross Area of your property is buildable! Some of the land may be impacted by Flood Plain, Wetlands, Steep Slopes, Endangered Species, Jurisdictional Restrictions and Setbacks, or perhaps possibly an Historic District  if it is, these areas can either not be developed into lots or Development may be restricted.

You can quickly evaluate how many acres of a property might be affected by one or more of these constraints  by accessing the Jurisdictions GIS Mapping and viewing the various Layers and/ or Overlay Districts; If that option does not exist, calling or emailing the Planning Department and asking for the Overlay Mapping for your  Property is always a possibility. 

If any Physical, Environmental, or Regulatory constraint exists on your property, roughly estimate how many acres of the property are affected.

Here is an example how to do it:

Back-of-the-Napkin Yield Calculation

To roughly calculate  the By-Right  Yield of the property, simply Subtract the number of constrained acres from the total number of acres of the parcel then multiply the result by the By-Right Zoning Density. Finally, multiply the resultant  by 0.7; this reduction will account for areas attributed to   roads, setbacks, and easements.

For example, if your property consists of 100 acres15 acres is Wetlands and the By-Right Zoning allows for a maximum density  of 4 units per acre. Then the  By-Right Yield  could be calculated as: (100-15)*4 * 0.7= 238 so the Maximum Yield could be estimated at 238 Lots.

There is a more accurate way to determine the Maximum By-Right Yield;  hire an experienced Civil Engineer to prepare a Conceptual Sketch Plan. Be advised, the sketch plan might yield more, or less, than the rough calculation.

 

Back-of-the-Napkin Land Value Calculation.

If your property has a high potential for residential development, your buyer is either a Developer or a Builder/Developer that has an In-house Development Division. Either will develop finished lots in an effort to keep the pipeline full for the Builders.

To determine the value of the Raw Land, find the active builders in your area, call  and ask if they are interested in acquiring raw land with a By-Right Yield of “X” lots (previous step calculation), Zoned “Y”(The Zoning District) in the area of (property location). If the answer is yes, ask  their price range per lot for raw land. With this information you can reasonably estimate your raw land price.

The final step in, your land evaluation will be the calculation of the Land Value.

Using the Calculated By-Right Yield from our previous example; If the Builders estimated price per lot raw lot is $8K, then by applying yet another simple calculation:238*8,000 = 1,900,000, from this,  it can be assumed that the property would be worth, somewhere on the order of, One Million Nine Hundred Thousand Dollars ($1,900,000.00)

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