How to Be Successful with Raw Land: Adding Value and Selling Land to Developers

If you want an amazing opportunity in the real estate market, raw land acquisition could be just the ticket. 

Raw land, or vacant land, is undeveloped land that has yet to be built on.

While a vacant lot may seem like a simple property, it's a much-desired commodity for residential developers. 

Home builders always need more land to build on. And that’s exactly what makes raw land a profitable investment opportunity.

The secret to success with raw land is recognizing potential properties, adding value through entitlements, and presenting them effectively to developers. And that's exactly what we do at VestRight.

Whether you're a real estate professional or an entrepreneur seeking to build a solid financial future, raw land acquisition could be a game-changer for you. 

We’re breaking down the fundamentals of how to be successful with raw land in this blog post.

Finding Raw Land with Development Potential

In the world of raw land acquisition, understanding the vacant land development process is essential for success. 

Acquiring raw land involves:

• Identifying raw land with development potential.
• Performing due diligence.
• Understanding the local market and zoning regulations.

To start, it's important to find vacant land, not just any old empty lot. Your raw parcel must come with development potential. 

At this prospecting phase of the overall home construction process, you have to do extensive research to find properties with potential for development. It takes time.

And once you've found a piece of raw land that fits the bill, you'll need to perform due diligence to ensure the land is suitable for housing.

Understanding the Land Market and Demand

When you're looking to acquire vacant land, it’s essential to conduct thorough market research with due diligence. Understanding local market trends, demographics, and zoning regulations can make all the difference when identifying raw land with real development potential. 

Zoning regulations vary from city to city and state to state, so you can improve your land prospecting approach by researching zoning regulations and understanding the zoning restrictions and requirements for housing development in the area you’re considering.

Knowing what types of homes are in demand in the area and what zoning laws and building codes dictate your land use options can also help you identify the most lucrative opportunities for value-add projects. 

Local market trends will also play a key role in the market price for your raw land. If you’ve been following recent prices for the area, you can value the land at a competitive price so both the landowners and developers are happy.

Factors to Consider

There are a few other essential factors to consider when evaluating raw land for development potential, such as location, access to infrastructure, topography, and soil quality. 

We use these various factors to determine the highest and best use of a raw land parcel, assess its economic feasibility, and estimate its potential profits.

Here are the top factors to consider when evaluating undeveloped land for its home development potential:

Location

Accounting for the location of the raw land is vital for understanding its feasibility and maximizing its ultimate return on investment. Your due diligence regarding location should include understanding local market trends, zoning laws, access to public transportation and other infrastructure, and availability of water, electricity, and sewage systems.

Utilities

Adding utilities and amenities to raw land also increases its potential. Home developers need water, electricity, gas, and internet, as well as roads, sidewalks, and landscaping. By partnering with local utility companies or government agencies, you can help with the preliminary heavy lifting to reduce the overall cost of improvements and make the raw land more attractive to potential buyers. 

Accessibility

The roadways leading up to a property can impact its attractiveness to potential buyers. Building road access to a vacant property leads to higher costs associated, since building materials and labor may have to be transported over rough terrain.

Topography

Many aspects of topography, such as elevation, slope grade, soil type, drainage, and flooding concerns, should be considered before buying raw land for development purposes. These aspects are essential in determining what types of residential buildings can be built on the site, including their design specifications, to meet safety standards.

Soil Quality

Conduct a thorough soil quality analysis before investing in a piece of raw land. This analysis will help you understand the land’s suitability for residential construction and the project's cost-effectiveness over time.

Finding raw land and understanding the process of taking it through approvals and entitlements takes time and effort, but it can be a profitable investment with the right strategy and market research.

VestRight’s proven approach is a fundamental value-add model of real estate. We like to call it the BEST kept secret in the industry. 

Here’s why…

Adding Value to Raw Land

Now, let's get into the nitty-gritty of adding value to raw land and selling it to a developer. This phase is where the real money can be made in land development projects, and why raw land acquisition is better than anything else in real estate. 

The key is to find off-market raw land with development potential, take it through land entitlements, calculate the fair market value, and understand the costs and timeline to develop the property. You also need to know the terms and conditions a developer requires to close a deal.

Typically, the end game for a residential land developer is to take a piece of raw land and subdivide it into individual finished lots. The developer will then build or sell the finished lots within the allocated profit margin. 

To meet the demands of these builders and earn big profits doing so, our land acquisition specialist specializes in residential, off-market raw land deals with development potential. Through our successful model, we gain high returns by selling approved land to homebuilders—we do all the work for them!

It could take a very very small upfront investment or no capital of your own, and the returns can be MASSIVE.

Investors can add value to raw land in two key ways:

1. Find developable raw land with a willing seller
2. Negotiate and execute the land purchase agreement
3. Get land use approval
4. Sell paper lots to homebuilders

Let’s get into the details.

Zoning Changes

Land zoning changes and variances are powerful tools that can help you add value to raw land. By seeking zoning changes that allow for higher-density or more profitable land use types, you can unlock the potential of vacant or rural properties and maximize profits. 

Of course, this process can be tricky, and it requires working with local government officials and community stakeholders to obtain the necessary approvals.

VestRight makes this process easy to learn.

The first step is to research the current zoning restrictions and land use regulations in the area. This preparation will give you an idea of possible changes you'll need to make to your land’s zoning classification. 

From there, you'll want to assemble a team of experts, including attorneys, architects, and other professionals, to help you navigate zoning laws.

Infrastructure Improvements

When dealing with raw land investments, you should also look at the cost of infrastructure improvements to increase the land’s value and make it more attractive to developers. Upgrading the infrastructure, including roads, water, and sewer lines, often pays significant dividends in these raw land investment deals.

Consider the several utility connections required for a future housing development to work:

• First and foremost, developers need electric and natural gas lines to ensure homes can function correctly. 
• Water lines are required to deliver fresh water.
• A sewer system, such as a septic tank or connection to the local sewer system, must redirect sewage away from homes and bodies of water. 
• Telecom services, like internet, phone, and cable, are also essential for building modern homes.

While upgrading infrastructure may seem daunting, it's crucial to understand how much it will cost a developer to connect these utilities for a housing project on a piece of vacant land. 

To close a successful deal with a land developer, you need to have multiple exit strategies in mind. There are several traditional exit strategies to consider when selling value-added raw land.  While there are many, here are 3 common ones:

This forethought on your part will ensure a raw land purchase and development project is feasible, financially viable, and attractive to developers. You can have peace of mind knowing your deal will remain within budget and provide an acceptable ROI for everyone involved – from the land owner to you as the acquisition specialist to the buyer.

Remember, when it comes to raw land investments, it's all about recognizing the potential.

Selling to Developers

Once you’ve found the right land and added value through entitlements, then you’ll have the chance to sell it to the developers. We'll discuss two important strategies for selling raw land and negotiating.

Building Relationships

Networking and creating genuine relationships with local home developers is a key component to successful raw land acquisition. By understanding their needs and preferences, you can tailor your real estate marketing and outreach efforts to attract the right potential buyers. 

At VestRight, we prioritize building solid relationships with developers. Aside from adding value to the land before selling it, networking with homebuilders and developers is one of the key ways we successfully negotiate incredible deals for the raw land we add value to. 

When you’re approaching developers, ask what they're looking for in their development project. Engage them in an open, friendly conversation. 

Make a friend, and you’ll have the best chances of making a big payday through your raw land deal.

Multiple Exit Strategies

To close a successful deal with a land developer, you need to have multiple exit strategies in mind. There are several traditional exit strategies to consider when selling value-added raw land and you always have multiple options when it comes down to it.

While there are many, here are 3 common strategies:

1. Exiting a deal early
2. Completing a feasibility study
3. Waiting until the deal is closed to get paid

Each strategy has its pros and cons (download the free Raw Land Playbook for details). Weigh them carefully. 

At the end of the day, it's all about finding the right strategy that fits your investment goals and risk tolerance. 

Tips to Be Successful with Raw Land

By investing your time and resources into your next raw land development deal, you can reap the rewards of selling land and generating significant profits. VestRight has the tools and expertise to show you exactly how to be successful with our model. 

Here are three tips for success:

• Follow the market to watch where growth is heading: Anticipating residential growth and getting ahead of human migration patterns can help you find raw land with development potential and maximize your ROI.
• Feasibility Study: Before pursuing a raw land deal, assess a feasibility study with the property land. You can conduct a preliminary analysis to determine if it's viable to be successfully developed. It typically will look at all the features and challenges of the land to determine if building on it is feasible, taking into account factors such as the landscape, utilities, and budget.
• Build a connection with the landowner: While it's always good practice to get to know the other party in a negotiation, developing a strong bond with the landowner is particularly important when purchasing raw land. Take the time to understand the owner's perspective, and their concerns, so you can create a favorable negotiation.

Let VestRight Guide You to Success in Raw Land!

If you’re ready to make money by finding raw land and adding value to it—and take your next business endeavor to the next level—it's time to consider VestRight. 

The process may sound complex but don't worry, we’ll take you step-by-step and show you how to be successful with our proven process and expert resources. 

Why not become our next success story? Let VestRight help you reach your goals with raw land. And download our free eBook Here as a starting point to help.

Discover how a single land deal can outperform 100 real estate transactions by addressing the housing shortage in the United States. To learn more about this innovative program, click here to speak with our team.