The single biggest risk is not knowing your numbers before entering the development business. You should buy land based on the price per developable square foot and the potential density the site can accommodate, and understand both upfront soft costs and hard construction costs before building.
You should speak to a member of the municipal planning staff before closing on a property to confirm the zoning allows your intended use. Your expectations must be realistic, as you cannot build residential on employment lands or condos in an industrial park.
Lenders typically finance about 50 percent of the land value depending on location. If you have drawings and a construction budget ready at the time of application, lenders can potentially go up to 75 percent of the land value.
There are redevelopment opportunities from small strip mall landlords liquidating properties due to COVID-19 tenant closures, as well as land for sale that has been rezoned and is ready for permit. However, rezoned land prices may be higher than actual worth.
Terms and rates vary by project depending on location, pre-sales, your experience, your team's experience, exit strategy, and the capital injected into the deal.
