By Andy Westby | President, Goldmark Commercial Real Estate
If you’re thinking about getting into land development for the first time, congratulations! You are stepping into a world full of opportunity. But like anything in commercial real estate, success depends on preparation, understanding, and having the right people in your corner. I have worked on 100+ land sales, and I have learned that while no two projects are the same, the foundational principles remain consistent. Here is what every first-time land investor should know before jumping in.
Start with the End in Mind
One of the biggest mistakes new investors make is falling in love with a piece of land before knowing what they want to do with it. Development starts with vision. Are you looking to build residential homes, a strip mall, a warehouse, or simply hold the land as an investment? The intended use will shape every decision, from location and future zoning potential to infrastructure needs and financing.
Understand Zoning, Entitlements, and Floodplain
Zoning is where many first-timers run into a wall. Just because you see open land doesn’t mean you can build anything on it. Municipal zoning laws determine what is or is not allowed, and changing those designations (entitlements) can be a long and complex process. Before purchasing, check the zoning status or city growth plans, and understand what would be required to rezone if needed. Lastly, building in the Fargo-Moorhead metro usually means you may have floodplain and/or elevation issues to deal with. Knowing how much fill a site may require is important to understand up front. As for all of these topics, I always tell clients: “Don’t assume. Verify.”
Know the Infrastructure Requirements
It’s easy to underestimate the cost and complexity of getting land ready to build. Roads, water, sewer, electricity, drainage…none of it happens automatically. Depending on the location, bringing utilities to a site can be a major financial and logistical challenge. It’s worth working with a civil engineer or land planner early on to assess what it will take to make your project viable.
Study the Market, Not Just the Dirt
Just because a piece of land looks like a good deal doesn’t mean it is. You need to understand the market around it. Who will use what you build? What competition is there for other buildings? Are there jobs nearby? Is the population growing? What’s the traffic count on the nearest road? What are rent prices doing? If you do not understand the current market or where it may be headed, you may end up with a project doomed to fail before you stick a shovel in the ground.
Partner with the Right Team
Even experienced investors don’t go it alone. You need a solid team, including a real estate broker, land use and design experts, civil engineers, lenders, and often a city contact or two. My job is often less about “selling” and more about assembling the right people to get the project from concept to completion. The better your team, the fewer surprises you’ll face.
Consider the Holding Costs and Timeline
Land development doesn’t happen overnight. There are permitting processes, infrastructure timelines, and market cycles to consider. Can you afford to hold the property while it sits undeveloped? Are you prepared for a multi-year timeline? Patience and long-term vision are key.
Financing is Different for Dirt
Financing raw land is not the same as financing a stabilized property. Banks see it as higher risk, so down payments are larger and interest rates are often higher. Have a solid plan and budget when you approach lenders. They’re not just investing in land, they’re investing in your ability to bring a project to life.
Start Small, Think Big
Your first land deal doesn’t have to be a 100-acre master planned development. It could be a single parcel with a straightforward use. Start where you can learn, build relationships, and gain experience. Over time, those small wins lay the foundation for bigger developments down the road.
Final Thoughts
Land development can be incredibly rewarding, but it’s not for the faint of heart. It takes due diligence, teamwork, and grit. But if you put in the work upfront and surround yourself with the right people, it can also be one of the most profitable and fulfilling paths in commercial real estate. If you are thinking about getting started, reach out. I am always happy to share what I have learned or connect you to others who have been down the same path before.