Whether you are getting into real estate to pursue short-term or long-term business investments, you should be familiar with the types of land development.
The most common types of land developments are residential, commercial, industrial, agricultural, public, and infrastructure. However, many vacant land parcels that have been modified also fall into developed land but have not yet been classified for their intended use.
Getting into real estate is one of the safest investments out there and can come with a lot of versatility and financial gains. The reason for this is that real estate investments tend to be one of the most reliable ways of investing your money with a minimal amount of risk. The most important thing you should do is choose the right type of development for the parcel of land you are assessing. With that being said, there is always a certain level of risk involved in any investment, which is why you want to make a careful and calculated decision before you commit to any type of land development. Let’s explore the different types of land development further.
Land developments located on private lands are owned and established by private property owners, various real estate organizations, and business owners. Before you begin pursuing any type of land development, you should always consult your local county’s building authority to ensure that your development project is within all legal zoning rights.
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Types Of Land Development
As you assess different land parcels, you will likely find that some land areas are much better suited for certain developments than others, which is why you should constantly remind yourself that location is everything when it comes to real estate.
Regardless of whether you are acquiring land for building a private residence or are a real estate tycoon who is looking for a solid financial turnaround, your ability to determine the worth of the land you are reviewing and the success of its long term development will help ensure that your investment pays off.
With that being said, it is always a good idea to has some vision before you begin considering different types of development ideas. The reason for this is that the more aware you are of what you want to achieve through your land development, the easier it will be for you to narrow down your options and weigh out costs.
After considering your goals, you should have a general idea of what your budget is for your development so that you are not overreaching before you begin your build. To help you better understand the different types of land developments better, we are going to take you through each type.
The most common type of land development we see is residential properties. Residential land tends to be one of the most popular land investment opportunities for both investors and everyday citizens.
The reason for this is that residential properties come with much less risk and also can prove to be quite versatile in a number of different ways. With that being said, the location of a real estate development will say a lot about its long-term success. Here are the sub-categories for residential developments.
Urban Residential Developments
Since location is the first thing any homeowner considers before developing a private residence, you will find that most people want to set up shop somewhere that has more attractive qualities, which is why urban residential developments usually have much more popularity and reliability.
A residence that is located within a city will generally cost considerably more to develop or acquire, but this can often be a good thing, as it likely shows that your urban residence will have steady market trends. The job market within most cities tends to be a lot stronger than in rural towns, which can make committing to a residential development much more reassuring.
A residence located within a city environment will generally have much better access to amenities and services such as schools, businesses, and entertainment. With that being said, residential developments located in urban environments also come with their fair share of difficulties.
Urban residences can fall under much stricter regulations when it comes to altering your development project. You may have a hard time converting your residence into any other type of development. This means that once you have established a residential development in an urban city, the development will likely be locked into this classification.
Rural Residential Developments
A residential development located in a rural environment will be less favorable to many buyers and investors due to the location being not as accessible.
These residential properties are harder to sell and can come with greater risk for long-term investments, which is why they should be approached cautiously. If a rural residential development is located very far away from an urban area, it will likely have much less access to the various amenities that a city can offer.
However, these developments also come with a lot of perks as well. Rural residential properties can often be developed at a fraction of the cost of an urban home. In addition, these properties are much less regulated and are not as confined to zoning rights.
This means that you are able to have much more creative freedom when pursuing this type of development.
Rental Residential Developments
A residential development that has been established as a rental property will likely be located in a city, however, it is also possible to find these types of developments in rural environments.
Rental residential developments are one of the things that make this type of land development such a safe investment. Regardless of whether you developed your residence for your personal use or re-sale, you can always utilize your property for receiving income from rent.
This offers you the opportunity to see a return on your residential land development before you begin to sell your property. While keeping your property as a rental you are able to sit on your land and wait for a perfect time to sell.
The next most common type of land development is for commercial use. These land parcels are essentially any development that has been set up for business purposes.
You can find commercial businesses virtually everywhere from small towns to big cities - and sometimes even in the middle of nowhere. The reason for this is that business opportunities are everywhere if you are able to identify them, which is why it pays to have an eye for commercial business prospects if you plan on pursuing this type of development.
The place you will find more commercial businesses developments than anywhere else is within urban living environments - especially located in downtown and central areas. These places tend to have much stronger job markets and have competitive wages that enable consumers to shop more. Some of the most common types of commercial business developments will be established as retail stores, restaurants, gyms, and cinemas.
However, you will find that there are plenty of commercial business developments that exist outside of city environments. Given that rural areas offer a lot more space for development projects and generally have much less oversight and regulation, many commercial business developers opt for pursuing their build away from cities.
Some of the most common commercial developments located in rural areas are car dealerships and warehouse stores. These land developments offer much more flexibility for commercial business owners at a fraction of the cost of an urban city development.
The industrial complex is a major type of land development and will almost exclusively be located in rural environments that are further away from most cities.
The types of developments that an industry pursues will generally be dependant on the industry itself. Since functions of the industrial complex can vary so much, the location of the build will generally be catered to an environment that is best suited for whatever is being produced.
Most industries are under the spotlight of regulators and enforcers due to the potential risk of environmental damage that can be caused by such developments. These builds generally get a lot more red tape and are checked on regularly to ensure that no violations are being committed.
With that being said, you will find that industries like to position themselves away from the eye of the public as much as possible. The different types of industrial developments will vary from warehouses, data centers, manufacturing, processing plants, and other large-scale operations.
It can be easy to forget that some of our nation’s largest landscapes have undergone some form of development. Land that has been classified and established as agricultural farmland is technically still a land development, as the property has been modified or altered in some way to accommodate farming.
This type of development is quite primitive and basic in comparison to most other developments, as the land did not need to be heavily changed in order to be turned into agricultural land. Before any kind of development can begin for farming and food growing, the land first has to be confirmed as being worthy of food production.
The reason for this is that not all vacant or raw lands are suitable for growing food. A land parcel that simply has dirt on it does not always imply that soil within the ground is fertile. If a land parcel has experienced land degradation, then it will likely not be worthy of agricultural development.
If a land parcel has healthy soil, it’s the first step to beginning an agricultural development. After fertile soil has been established the farmer will also need to develop other aspects of the agricultural land to ensure that the farm has full functionality. This would include setting things up like irrigation and buffer strips for the property.
With that being said, some agricultural developments do not rely on crops for food production and instead are producing cattle or other meat products. These land developments can often even be simpler to establish, as they have fewer criteria to function. However, these land developments will generally need some basic structures and fencing before they can become operational.
Public Land Developments
A lot of the developments pursued within the United States are actually conducted by our own government. The government establishes various types of land developments, which can perform a wide variety of functions. The majority of all of these developments are established to provide some form of public service.
The land developments created by the government are technically public property and have been paid for by taxpayers, but not all of these developments were created for public use and may merely be office buildings for various government organizations. To understand public land developments better, let’s dive into some of their different uses.
- Schools - public schools are located in just about every town regardless of their size. These public buildings are a major type of land development established by the government.
- Public Parks - our nation has thousands of public parks that have all undergone a certain level of development such as playgrounds, baseball fields, and public toilets.
- Police Stations & Fire Departments - both of these essential public services are funded by the government through taxpayer dollars.
- Hospitals - a government-funded hospital would also classify as public land development.
The developments established by our government also perform a wide variety of functions and can be found in various office buildings for things such as banking and financial institutions.
The final major type of land development is our nation’s infrastructure. With a country as large as the United States, we have thousands of miles of roads, highways, and bridges that need to be developed in order for public access to be practical.
This means that all public roads and even private roads have had to go through some sort of development to be operational. However, the amount of infrastructure we develop in our society goes far past roadwork. Here are some examples:
- Sewage & Drainage - each urban city (and even most rural environments) have had an extensive amount of sewage development done to accommodate basic social needs such as plumbing and flood prevention.
- Railways - our nation’s incredibly long railway system is a perfect example of vital infrastructure development in our society.
- Communications - our government is also responsible for developing our telecommunications so that we are able to have access to modern communications and the internet.
With that being said, some of our infrastructure is actually built by the private sector for similar functions that are exclusively set up for businesses, industries, and corporations.
Factors To Consider
As stated above, land developments can vary depending on a wide variety of different uses and location features. They can be established by private individuals and organizations, as well as our own government.
However, land developments can often take different forms and can become more dynamic - if the property owner desires to do so and if it is within their legal right. To understand this better you should keep these factors in mind when assessing land developments.
- Property Conversion - it’s often the case that land developments that were established for one type of function or classification will change into a different type of development later on through property conversion. An example of this would the acquisition of large agricultural land, which is then converted into industrial or commercial land.
- Property Division - some properties that are quite large in size can be divided into multiple plots of land and sold off independently. This is generally done by a landowner who acquires a large parcel of land cheaply and then pursues developments for each plot. Depending on the location of the property division, the owner may be able to pursue more than one type of development on these lands.
- Vacant Land - a lot of properties that have been classified as vacant land may have a certain level of development. This development classification for this kind of parcel is usually determined by its location. If the vacant land has any sort of structure, modification, or is connected to utilities, it has undergone some form of development.
If you are considering a land development, you should be aware of all of the specifications of your property so that you can optimize your build and get the most out of your investment.
About THE AUTHOR
Cameron Scott has been in the land development industry for over 20 years. During that time, he has worked on hundreds of development deals ranging from 5 acres to over 100 acres. Most of his work has been in Utah and Texas, where he has worked for large, national home builders as well as local companies. He has worked as Land Entitlement Manager, Land Development Manager, and most currently as Land Acquisition Manager.Read more about Cameron Scott