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Due Diligence: Real Estate Development

Due Diligence: Real Estate Development

In addition to an acceptable package detailing the projected use of the property, associated costs, and future cash flow projections the following issues need to be addressed in depth as well:

A. PROPERTY / TITLE

Maps, locations, and overview items
Current ownership and control
Current title holder
Property title documents / last search
List of encumbrances, liens
Restrictions, easements, covenants, etc. running with the land
Leases, contracts, ordinances etc. associated with the property

B. LAND USE ISSUES

Municipality and other governmental entity with jurisdiction over the property
Current zoning and necessary changes to existing zoning
Construction permits and filing procedure
Identify necessary agency permits
Current permitting turnaround timing
Current Official / Master Plan designation and status
Local infrastructure studies exhibiting sufficiency for project
Failed / successful / ongoing projects in the area

C. ENVIRONMENTAL ISSUES

Former uses of property
Past environmental issues and fixes
Past environmental investigations
Additional environmental studies required
Contiguous property environmental issues or concerns

D. TAX / LEGAL

Any and all ongoing / pending actions or events
How the property has been taxed in the past
Referendums / actions to raise taxes
Is owner / seller an individual, partnership, trust, corporation, limited liability company, etc.
Does seller have authority to convey property and title
Actions or events involving current / past owners
Settled legal actions or tax events

Christiansen (1996) suggest the following to be included in any feasibility study: – Site description – Market research – Financial Feasibility Analysis – Planning Layouts – Risk Assessment

Understand that development of raw land into lots suitable for construction is a complex process. Therefore a proper due diligence requires detailed input from experts. “Forecasting is an imprecise art at best and projected cash flows if not carefully prepared can result in totally misleading forecast.” (Sorensen, 1990)

About Richard Alexander

Hi, I'm Richard Alexander a New York City and Trinidad & Tobago based Online Marketing Real Estate Entrepreneur and owner of InnersoulRealtyInc.com. InnersoulRealtyInc.com is a real estate investment education company, offering products, education, and systems based on REAL WORLD applications. We are dedicated to educating and helping homeowners, home buyers, sellers, renters, real estate agents, mortgage professionals, landlords and property managers find and share vital information about homes, real estate, mortgages, and home improvement. The goal is to enable other investors with drive and determination to duplicate successful realtors and achieve real wealth through investing in real estate. This Real Estate Educational Program is designed to help any real estate investors secure unlimited funding for real investment purposes without the use of banks or hard money lenders and without using any cash out of pocket or your own personal credit. Navigate throughout our site and join people all over the world who have benefited from proven methods to help sustain your real estate investment in any economy.
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