Successful vs Unsuccessful Development Projects
My name is Bobby Mink and I have the pleasure of being one of the instructors for RLI’s Land University (LANDU) Education Program. Having been around the construction industry for over 40 years, I realize the need for great training sessions like Subdivision Development. As a residential builder for many years, I had the chance to see the impacts of both good, and not so good development planning. As I was promoted through the management ranks through the years, the importance of great planning and a really good land development processes became painfully clear. There are a few areas that are a part of our Subdivision Development class that make a huge impact on the success or failure of a Subdivision Development.
The Research and Analysis Phase
The first area is the research and analysis phase. I have worked with organizations where every detail was gathered, reviewed, and processed. Those developments generally turned out really well and extremely profitable. I have also worked with organizations where our “gut” says this is a good deal for us. In those cases, the lack of thorough and detailed analysis created for catastrophic subdivisions where profit margin, price and product missed by a mile.
The Contract Phase
The next area that creates a real challenge when buying and developing a subdivision has two parts that really impact the journey. Part 1 is the contract phase. In the organization that had a well-defined process, the company with good systems and processes created a relatively predictable timeline for the development. In other organizations, the “gut” process usually produced a timeline that was missed by a mile.
Pitfalls To Avoid During The Contract Phase
- Not taking into consideration how long it takes to get all the site inspections done.
- Not knowing how long it takes to meet with city officials.
- Not knowing how long it takes and how difficult it is to meet with neighbors and Home Ownership Associations (HOAs).
This lack of process can create an ever-moving target for the investors, the builders, the sales and marketing team, and the community.
Part 2 of this challenge is the actual development or vertical construction phase of the process. In the organization with good processes, there was a defined and managed schedule with scopes of work that moved along relatively predictably. Knowing that unforeseen things can arise, and we can have bad weather, sickness, vacations, or supplier and trade contractor issues, a well-processed and well-scheduled subdivision development can have a somewhat clear start and completion time frame.
However, if there are not good development processes and schedules, this phase can drag on for months longer than planned. Once again, for a builder planning on new houses starts to hit his projected numbers for the year or for a sales and marketing company planning on new homes for an agent to sell, this type of unpredictability is catastrophic. You may not only lose your builder client, but you may also lose your sales and marketing team and risk changes in the development’s codes, inspections, municipality buy-in, and neighbor and HOA challenges all because of a lack of execution and process. And, it is super frustrating and costly for everyone involved.
So, my best recommendation is for land agents to join us for RLI’s newly-updated LANDU Subdivision Land Development class that I teach so you are prepared to execute the best and most profitable developments you can!