Spring 2021 Issue - 83
JIM HEID
Small-Developer Challenge
HOW TO ACQUIRE THE BUILDING SITE
-
BUILDING
A TOOLKIT
FOR REAL ESTATE
ENTREPRENEURS,
CIVIC LEADERS,
AND GREAT
COMMUNITIES
An excerpt from
Building Small: A Toolkit
for Real Estate Entrepreneurs,
Civic Leaders, and
Great Communities
JIM HEID
Acquiring your site intelligently requires a
combination of math, intuition, and dispassionate objectivity. A project has so many unknowns that you can
never " perfect the model " and use it to replicate the next
project. But you can establish the basic assumptions
that matter, test potential scenarios, and gain a working
knowledge of the key factors that will ultimately influence the project's financial outcome. This process helps
identify which " dials " you need to pay attention to and
which deserve constant review to manage your project to
a successful result. That result always starts with acquiring your site intelligently.
Two of the earliest steps in the development process
are site control and feasibility testing. The first is the
industry term for getting control of your development
site. The second comprises the analyses that help determine whether a project makes economic sense and what
it will take to be successful.
Taking Site Control
Most nondevelopers assume that developers just buy
the site outright and thereby have control of it. But small
developers typically have limited financial resources, and
the process of envisioning, designing, gaining approval,
and then constructing may take a while. This makes
obtaining site control through an outright purchase difficult. And even if they could buy the site outright, taking
on that level of cash outlay upfront can seriously hinder
the project's ultimate return.
In addition, the process to secure a site is time consuming. There are initial inquiries. If the property is not for
sale, making sure the owner knows you are interested and
has a comfort level with you is key. Do not think tying up
off-market properties is just about price-or that price is
a function of a rational process. Most legacy landowners
have a lot of emotion tied up in their properties: they
recall working there; they hear their parents still in the
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Spring 2021 Issue
Table of Contents for the Digital Edition of Spring 2021 Issue
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Spring 2021 Issue - Cover3
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