Once you’ve found a piece of raw land that you want to take to home builders for development, you first need to go through the land entitlement process.
This is where you create your greatest value for the home builder. Land entitlements are complex, but luckily you may not have to get into the nitty-gritty of the process when you partner with VestRight.
Our experience in the land entitlement process can guide you toward a high-level understanding of all the requirements involved in entitlements, so you can bring superior value to home builders and close profitable deals.
Builders will deeply appreciate you when you present them with a land deal that has already gone through the entitlement process.
Here in this guide, we show you how to get there!
What is the Entitlement Process?
Land entitlement is the industry term for all of the legal processes required for a land developer or other real estate professional to gain approval for a land development plan. Anytime someone wants to alter the way land is used, it must go through this process.
The entitlement process is often complex. It involves several different regulatory agencies as well as the local community, all of whom have their own requirements for land developments in their area.
If a land development plan successfully gets through all of the necessary approvals, then construction can move forward.
Why You Need to Get Land Entitlements
Land entitlements are necessary anytime you change a piece of land’s use or appearance – in our case, using raw land for residential homes.
When it comes down to it, the entitlement process determines whether or not your land deal will succeed. That’s why it’s crucial to understand the various steps in taking a piece of raw land through the necessary entitlements.
A development project won’t be able to move forward unless you obtain the right approvals to prepare that land for construction.
Here at VestRight, we specialize in finding raw land with development potential and getting the necessary land entitlements to prepare that land for home builders (think Lennar, D.R. Horton, etc.) because those developers love being presented with ready-made land deals.
By getting all of the right entitlements in place and wrapping up your land deal in a nice little bow—already approved and ready to go—you’re going to become the person home builders love to pick up their phone for.
Generally, when you work with VestRight, you don’t have to handle the entire entitlement process – we do it for you (depending on the program you choose). Just hand off your proposed project to our experts, and we’ll take it through all of the necessary entitlements to prep the deal.
How Long Does it Take and How Much Does it Cost?
The land entitlement process can be quite lengthy (and costly). This is partly why home builders appreciate real estate professionals and entrepreneurs who can bring them land deals that have already been taken through all of the required approvals.
It saves them a lot of TIME.
VestRight always kicks off the process with a feasibility study. This tells us whether it’s even remotely possible to take a piece of raw land through to the home-building phase.
A feasibility study typically takes 90 to 120 days. But since we hire a consultant to do it, your role and ours is mainly just sitting and waiting.
While the consultant and final study can cost $40k to $50k, that doesn’t mean you have to pay for it yourself, especially if you’re partnered with VestRight. We have many buyers lined up, so it’s likely one of them will agree to incur all the costs for us.
If the feasibility study determines your piece of raw land does have development potential for new home construction, then we’ll move forward with the rest of the entitlement process.
The entire legal process takes anywhere from three months to a year or longer. It’s never going to be quick. It involves lots of paperwork, multiple agencies, public hearings at the city council, and more.
If everything goes smoothly and your land development plan passes with flying colors, the process might go more speedily than others. But if you run into problems with your project plan, like zoning issues or new legislation, your deal could be delayed for months or even years.
Fortunately, with adequate preparation and risk management (see details below), it’s possible to minimize the time and costs needed to push a piece of land through entitlements.
We see an average of about one year from the time we identify a piece of raw, off-market land that we want to plan for development, all the way through to closing a deal with a developer after we’ve finished getting the necessary entitlements.
Examples of Land Entitlements
Land entitlement is a broad term for all of the various approvals that someone must take a piece of land through before construction can start.
The exact approval requirements for your piece of raw land will depend on local city and state government regulations, the size of your project, and other factors unique to your location and specific property. However, there are certain entitlement processes involved in every raw land acquisition deal you can expect.
The following outline describes a typical land entitlement process for a raw, off-market piece of land that you want to prepare for sale to a home builder.
Site Plan Approval
A site plan, also called a plot plan, is a drawing of the land that shows all proposed improvements, and any existing elements that will remain.
It basically serves as a blueprint for the land development project, depicting all fundamental components of the complete home construction project. This includes utilities, landscaping, stormwater drains, the houses themselves, easements, emergency vehicle access, and any other essential aspects of the project.
You will typically hire a civil engineer to develop your site plan for you. Once a preliminary plan is ready, you’ll submit it to the appropriate Planning Department at your local county and/or city government.
Zoning laws dictate how a piece of land may be used and sometimes even how the planned development must be designed.
If your piece of raw land is in a zoning district that doesn’t allow residential single-family home construction, you will have to obtain approval for rezoning through the local municipality.
This process involves a thorough application, public city council hearings, committee meetings, and other time-consuming processes. It can add anywhere between six months to a year to your overall land entitlements process.
Some municipalities have less strict zoning requirements, like building height and setback requirements, in addition to their major zoning ordinances. These more minor zoning rules can be waived for your raw land if you play your cards right.
The waivers are called zoning variances. They’re handled by the local Board of Zoning Adjustments, or simply the Board of Adjustments.
Conditional Use Permits
A conditional use permit is like a zoning variance, but it’s for more major zoning ordinances. This type of permit allows you to ignore certain zoning codes without having to go through the official rezoning process.
Like zoning variances, conditional use permits are also handled by the local Board of Adjustments.
If your piece of raw land doesn’t have direct access to existing utility lines for water, gas, sewer, power, cable, and internet, you’ll have to get utility approvals that allow you to install the necessary equipment to either a) hook up the property to the local grid, or b) install a well and septic tank.
Either of these options requires permits from the local government.
Extending utility lines to a piece of raw land usually requires you to work with local utility companies. If this would be too costly, you may want to opt for the well and septic tank option instead.
Any road construction involved in your development plan will need to be approved. There are a few different types of road approvals.
Whether you have roads as part of the plan within the development, such as neighborhood side streets, or you need to build roads connecting your land to the existing public roads in order to provide vehicle access, these road construction plans must be submitted for approval.
Depending on the expected amount of traffic your development is likely to cause, you may also need to do a traffic impact analysis and pursue approval for that traffic increase as well as the roads you’re building.
Most local governments have landscaping requirements that aim to keep a certain level of aesthetic appeal for the area. If your development plan includes any type of landscaping, you will likely need to get those specific plans approved.
When you’re preparing a piece of raw, vacant land for new home construction by a major home builder, the land needs to be divided into multiple home lots. This is called a subdivision, and your exact plan needs to be approved before development can begin.
Land Entitlement Risks and Challenges
Unfortunately, just submitting land entitlement paperwork for approval doesn’t always mean the submitted plans will be approved. Land entitlements are frequently kicked back for corrections, or even rejected outright. You want to avoid these landmines as much as possible.
To give your land entitlement plans the best chance for approval, it’s important to spend time on risk management before submitting them. These are the four main risks to consider when preparing to pursue land entitlements:
1. Municipality's future land use plan
The local government likely has a broad, big-picture vision for how land in the area can be developed in the future. If your plan doesn’t align with the city’s, you may have a problem.
Separate reviews will be performed by the fire department, utility providers, public transportation providers, and the parks and recreation department. Any of these could identify problems with your land development plan.
2. Political risks
If the land is in the path of political goals, doesn’t benefit the public, or is perceived to be negative by the community, the local city council may not approve it. Additionally, new legislation could be introduced that would pose a problem to develop.
3. Community risks
Every neighborhood has a distinct feel and culture. Local residents may be curious about what’s happening around them, and some may even be a pain to work with, but appeasing them will be critical for development success.
4. Various zoning or code violations
Your development process could be affected by unique zoning requirements that must be dealt with before your plan can move forward.
Ways to assess and mitigate these land entitlement risks include:
- Investigate the municipality’s long-term future land use plans for the area
- Review raw land development plans in the area that were recently approved/rejected
- Work with a local civil engineer who has connections in the city council
- Consult a land use attorney and/or real estate consultant who knows local laws
If you prepare ahead of time and make sure your plans meet local codes and other development requirements, you can avoid project delays and extra staff/consulting fees caused by a lengthier entitlement process.
How to Build a Land Entitlement Plan
Work with VestRight! No kidding, when you have the specialized knowledge to find raw, off-market land deals, we will handle the land entitlement process for you.
However, it’s still important for you to know and understand what’s happening with your deal when we’re pulling the strings for you in the background. You’re going to want to follow along as we update you on our progress with your land entitlements.
You can contact your local jurisdiction’s Planning Department for information on their specific entitlement process. For now, here is the basic method for how we build a land entitlement plan when preparing a raw land deal for a new home builder:
Submit a Pre-Application
The first official step when seeking approval from the government for a new raw land development project is to submit a land use pre-application to the local planning department.
Depending on the location of your land, the local Planning Department may either require or just recommend scheduling a pre-application meeting with their land development planning officials and other interested parties, such as the local:
- Fire marshal/fire department
- Public utility companies
- Community development director
- Public services department
You’ll do this after you’ve finished creating a solid pre-application land development plan for everyone to review.
Your land use pre-application is used to highlight any potential issues with your land development plan, so you can begin to address them before the official approval process. The pre-application should conform to all local codes and regulations.
Reviewers will not only give you invaluable feedback, they will also share their recommendations with the Planning Department, which is in charge of your plan’s final approval.
Begin the Entitlement Process
After you’ve received feedback on your pre-application and made any necessary corrections, you can submit your plan to the Planning Department for official approval.
The city and other local officials and residents will continue to investigate the impact of your proposed project.
Assuming you’ve dotted all your i’s and crossed all your t’s after reading this guide (or you’ve partnered with VestRight), you should be in a great position to receive final approval for your land development plan.
With VestRight, Go Through the Land Entitlement Process with Ease
Taking a piece of raw, off-market land through the land entitlement process for a home builder can make you a priceless asset. Home builders love it when our students call them with a piece of raw land with development potential all ready for them to develop and construct, with all the approvals taken care of beforehand.
They love this because the land entitlement process isn’t easy. It takes time, effort, and money.
You can certainly try diving into land entitlements yourself. But remember, students of VestRight avoid a lot of the tedious processes, complications, and money involved.
When you learn our process, you gain valuable tricks of the trade based on our real-world experience. We help you push your land deal through the entitlements process by leveraging our expertise and industry connections.
Start learning more about the VestRight advantage and our effective land entitlements strategies by downloading our free Raw Land E-Book. This short digital book explains how to get started with your first raw land deal. Check it out today!