Getting your first deal: Which direction should you take? Part III Entitlement timeframes.

Say your state poses a bit of a challenge from an entitlement standpoint. As we discussed in parts I and II, you have worked on your first deal-and it is coming along! You have even gotten to the next stage of pricing your unit(s). Now you are ready! Bring on the contractors-right?

Here is where you can get into trouble if you are not careful!

You may have a project that can take 18 months. Though that may sound like a long time, I have been told on past projects that timeframes can take as long as 12, 24 and even 30 months to take a property from acquisition through the permitting and municipalities. So this is definitely something to check out with your local code enforcements or building departments (or planning departments) and find out what kind of timeframe. Think about it-this could be brutal. Because here is what you are looking at, if you get the property under contract for a million dollars even and its going to take you an additional expense to get a site plan developed and the permit application process started, and it takes you a year and a half to two years to get it approved, you are paying holding costs on that million bucks for that whole period of time. No one wants this to happen. So that is something to be real careful about.

Now something that quite a few people are trying to do is get it to tentative map process just so that the city says yes, you can build, you can do it the way you have it designed and then sell that. In commercial deals, you buy raw land and then get it re-platted and re-mapped; it automatically goes up in value.

This can work for you but here is what you need to think about. There are a couple of different stages when you are looking at developing land or when you are looking at developing a project that has additional building units that you could put in. Each stage has different outcome and you will need to decide which stage works best for you. In part IV of getting your deal; Which direction should I take we will discuss the pros and cons of the stages and how they can be applicable in your situation.

Article Source: http://www.propertymagnate.com/articles

When it comes to real estate investing, I highly recommend information from Ron LeGrand . For valuable information regarding investing in homes visit RonLeGrand.com. You can also find useful investor resources in the free newsletter at MillionaireMakerNewsletter.com

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