Among all of the different real estate investing opportunities, purchasing and developing raw land presents the greatest risk. Some unknown factors and issues only surface once you break ground, whereas other complications may arise from improper knowledge of the market, investigations, and due diligence. To help negate these risks, DealRoom professionals have prepared this Development Due Diligence Checklist to help you navigate your next development venture.
Our checklist is:
The General Information tab of Development Due Diligence presents an overview of the investment. Data required includes the site’s address, information about the seller and neighbors, and the site’s history.
ITEMS IN GENERAL INFORMATION DUE DILIGENCE INCLUDE:
Inspecting and surveying the investment’s physical site will help you spot potential issues and ultimately appraise value. Not all land is accessible to utilities such as sewer, electricity, and natural gas. The difference between “onsite” and “nearby” utilities could potentially cost thousands when trying to connect the property. Information needed here includes details about the utility companies, their contact information, area maps, and mineral, oil, and gas rights.
ITEMS IN PHYSICAL SITE DUE DILIGENCE INCLUDE:
You must execute proper due diligence on licenses, zoning, and the title to ensure that your property complies with local guidelines, environmental protections, and regulations. This can prevent thousands in fines and fees down the road. Information and documents required includes licences, way leave agreements, zoning and title information.
ITEMS IN LEGAL DUE DILIGENCE INCLUDE:
Site surveys utilize the principles of mathematics, geometry, and other related sciences to measure and reveal more information about a site. These can draw attention to potential problem areas. Listed below are a variety of different site surveys. Not all of them may be applicable to your deal.
ITEMS IN SITE SURVEY DUE DILIGENCE INCLUDE:
Local leaders can have a large impact on the community’s real estate. During the planning phase, it is important to connect with some of these parties to gather support on the project. Different groups include police, local officials, and the zoning department.
ITEMS IN GOVERNMENTAL OPINIONS DUE DILIGENCE INCLUDE:
As in any transaction, you need to ensure that the seller has a clean record and sound financial practices. To investigate this, you will need their transaction history and terms of the sales. Additionally, financial due diligence includes utility verification and fee schedules and impact feeds.
ITEMS IN FINANCIAL DUE DILIGENCE INCLUDE:
This development due diligence questionnaire was created by and for M&A professionals and includes a comprehensive starting point for any diligence process. Every deal is different, however, and may require additional requests or diligence areas.
This development due diligence template can be easily downloaded and utilized as just the Excel sheet. However, it is most effective when paired with DealRoom’s due diligence software. We offer a secure space to conveniently request, collect, and house data. Additionally, DealRoom offers analytics, security features, and customized help to streamline the process. We are confident that with DealRoom you can close deals up to 40% faster.