Digging Deep to Reduce Your Development Risk
“Sometimes the best deals are the ones you don’t do”
Are you looking to purchase a piece of property? If so, how do you know if the property can accommodate your desired use? Understanding the constraints and limitations of a property is critical in constructing a successful real estate development. Taking short cuts during the property acquisition stage by not conducting an adequate investigation can severely limit development options and cost you significant time and money. Completing a thorough due diligence investigation helps uncover substantial risks or limitations.
The objective of the due diligence is to uncover the significant obstacles to developing the project. This investigation may include title review, zoning and entitlement regulations, utility accessibility, transportation capacity, topographic review, flooding potential, ecological evaluation, development timelines, and environmental site assessment. After discovering these issues, a formal report can be developed to aid in the negotiation process.
Thorough due diligence will give you a better understanding of the significant risk issues of the property. As a result, you can modify your proforma, negotiate the purchase price, modify timing in the purchase agreement, and identify long lead items of concern – all of which help you get the property at the right price to construct a successful real estate investment.
Our team is here to help. Talk with PEA Group’s experienced development advisors about the potential deal killers on your project.