Investment Land Feasability
- Land Location |
- How to Buy Land |
- Land Features |
- Investment Timing |
- Opportunity Costs |
- Community Acceptance |
- Single Lot Investments |
- Residential Lots |
- Speculative Lots |
- Lease vs. Resale |
- Building to Suit |
- Acreage |
- Acreage for Resale |
- Land Evaluation |
- Land Promotions |
- Land Bankers
Building Land to Suit
There are a number of ways to look at the suitability of a building plot of land for development.
In an attempt to convert a vacant lot into income-producing improved property, owners sometimes advertise that they will proceed with land development and construct a building on the lot that will satisfy the particular requirements of a potential tenant.
On the signing of a long-term lease and the construction on the building land, the landowner becomes a landlord in the traditional sense. At the expiration of the lease, the landlord continues to own both the land and the vacant building, which can be rerented or converted to a new use.
The difference in economic positions between an owner of a vacant parcel of land and an owner of a vacant building is of critical importance to an investor in deciding whether to initiate land development and begin construction.
In the first instance, the property owner pays relatively low property taxes and faces no continuing property-maintenance problems.
In the second, the owner's taxes are higher because they are based on the value of the building as well as the land. In addition, the empty building requires continuous care, repair and protection. All of these factors must be borne in mind when considering land development.
The economic position of a building land owner is more vulnerable, so the landowner who solicits a tenant on a build-to-suit basis will negotiate rather firmly for a lease that will completely satisfy investment requirements over the term of the initial lease period. To provide adequate protection against the increased risk, the rent will have to be arranged to develop an acceptable return on the investment as well as a timely return of the investor's cash outlay.
As a further precaution, a build-to-suit landowner participating in land development will generally avoid the construction of a single-purpose building if at all possible. Such buildings are usually difficult to re-rent and are expensive to re-model.
Nevertheless, many single-purpose buildings for fast-food franchises or 24-hour minimarkets are being constructed for strong, AAA-rated national tenants.
- Land Location |
- How to Buy Land |
- Land Features |
- Investment Timing |
- Opportunity Costs |
- Community Acceptance |
- Single Lot Investments |
- Residential Lots |
- Speculative Lots |
- Lease vs. Resale |
- Building to Suit |
- Acreage |
- Acreage for Resale |
- Land Evaluation |
- Land Promotions |
- Land Bankers
