Centuries ago, frontiersmen came to Minnesota in search of valuable animal pelts, timber and land. These intrepid explorers journeyed through dangerous, wild lands in search of a better life for themselves and their families. Many perished along the way due to disease, violent clashes with other ethnic groups, and wild beasts. The Native American tribes who once freely roamed these lands were tragically damaged by the influx of European settlers. While the history of this land is a volatile one, today's Minnesota remains an important source of natural resources such as timber, recreational lands, and large amounts of undeveloped acreage. Minnesota today is a vibrant, economically prosperous state. With its many acres of available land, Minnesota is a prime target area for development in the Midwest.
If you are considering building your own home, a community of homes, an assisted living facility, a bed and breakfast, a winery, an office building, or even a commercial factory, you should certainly check out the land available in Minnesota. Minnesota is home to a variety of large cities including Minneapolis/St. Paul, Duluth, St. Cloud, and Ely. While populations here are densely concentrated in the urban areas, land is available within a reasonable distance from these cities. If you are looking to develop a recreational facility, Minnesota is home to some of the most beautiful forested acreage in the country. Also known as the Land of 10,000 lakes, Minnesota is an ideal destination for people who love outdoor recreation such as boating, fishing, water-skiing, hiking, biking, hunting, and more! Land available for development in Minnesota is often less expensive that other areas of the country such as the eastern or western seaboards. With its temperate climate, rich natural resources and natural scenic beauty, Minnesota is also an area that offers a nice place to live for its residents. While it can be more reasonable than other areas of the country, development land in Minnesota has traditionally appreciated, making it an ideal investment, as well.
Once you have settled on Minnesota as the destination for your future development, there are a variety of considerations you should keep in mind. While the following list is far from exhaustive, it will give you some ideas of things you should think about as you begin your journey in the realm of development land in Minnesota. Keep in mind as you search for property that there may be countless hidden costs. Should you fail to accurately assess these costs, you may be in for an unpleasant surprise in the future.
1. Have a clear idea of what your ultimate goal is:
When you purchase land to develop you must decide whether you intend to build a commercial factory, an office building or a resort hotel. People buy land for a multitude of reasons including farming, commercial building, residential building, and even investment. The intended use of the property will dramatically affect the characteristics you may need to look for as you search for development land.
2. Identify the land you want to buy:
This can be the one of the more difficult parts of the process. Enlist the services of a trusted real estate professional to help you consider the attributes of prospective parcels of land. Some of the many factors you will wish to consider include the location of the property, zoning restrictions, your target market, access to a proven water source, and whether the physical attributes of the property match your intended goals. Make sure you take multiple opportunities to view a parcel of land before committing to a particular property. A realtor who specializes in development land in a particular region can help you analyze issues that may have never even occurred to you.
3. Carefully account for development costs:
Experienced developers will tell you that development costs often require a larger budget than the actual price of the land itself. When planning to purchase development land, you may need to budget for a survey; costs for clearing the land; fees to establish connections with existing electric, gas, water, and sewer lines; well-drilling, if necessary; excavation of the land; paving to connect your land to public streets; landscaping; legal fees; engineering fees; architectural costs; building materials; taxes; and the costs of labor for construction. Beware of impact fees, as well. Impact fees are fees that are increasingly common; they are assessed by local municipalities to pay for infrastructure, schools, and government buildings. Impact fees can be referred to as development fees, mitigation fees, facility fees and a variety of other terms, depending on the state and municipality you are dealing with. Also, be aware that you will be required to obtain, and pay for, all necessary permits. Development costs can be expensive, so do your homework to avoid being blindsided in the future. Also, keep in mind that some development fees may snowball off one another, necessitating multiple payments to a variety of vendors.
4. Assess the neighborhood:
Is the neighborhood appropriate for the type of development you intend? If you intend to live on the property, do you feel comfortable with the neighbors and your access to municipalities? Are there environmental issues in the area which may ultimately affect your use of the property (i.e. if you intend to run an organic farm, but the property was once heavily treated with pesticides)? Consider whether the property has a tendency to flood. Check out the typical weather and climate. Have your realtor engage in a comprehensive examination of comparable properties in the area, including how much recently sold properties have obtained. These are all important considerations to make before making a commitment to development land.
5. Double-check your finances:
Once you have engaged in a careful analysis of how much it will cost to develop a parcel of land, re-consider your financials before making the ultimate commitment. Do you have enough for your target down payment based on your lender's requirements? Some lenders require a down payment as high as 50% of your loan amount. Is your lender willing to advance you the money that you had originally predicted would be necessary? What sort of terms will control your loan? Are there tax incentives to engage in particular types of developments? If your intended use of the property doesn't work as you hope, can you switch courses and diversify the land's purpose? Don't be afraid to look around for the best financial deal for your land development. Careful planning of the financial aspects of your development can save you a great deal of money in the future.
While buying land for the purpose of developing it is not rocket science, there are countless issues to consider before committing yourself to a purchase. Engaging the services of real estate, legal, accounting, environmental and engineering professionals along the way may be expensive, but it will likely save you money (not to mention headaches) by avoiding unexpected problems in the future. The market for Minnesota development property is highly desirable, so while it is important to do your due diligence before purchasing, it is also important to act quickly to secure the perfect piece of property for your future development!