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Residential Development

Residential development is the process of converting raw land into a subdivision by adding the essential infrastructure into the land, but this description is extremely simplified compared to the whole process of development. Thinking about residential development as just construction does not do justice to the extent of preparation and “other” considerations involved in the process before, during, and after the actual construction takes place. The process is not as simple as many might think because of the various factors involved. Obviously, the condition and the location of the land is vital to the success or feasibility of any certain project, and it is the first consideration that must be addressed when contemplating a residential development. For this reason, it is common to spend a fair amount of money for studies of the land, on conceptual layouts, and on market studies before you might decide to move forward with a development or purchase land for the project. It should also be obvious that there is no guaranty that any certain piece of land will become a successful development even if it has been developed without incident or without unforeseen costs. The other main consideration at this initial stage in the process is determining your product. Experience and market trends are helpful here, but they are no guaranty of success. Residential development can be risky and is commonly quite expensive, so the business is typically reserved for those who have financial resources which are significant enough to handle the financial exposures involved. Because of the financial resources required and the time demands of development projects, it is common to have multiple people or companies as owners of a development company in larger development projects. After this due diligence is done and the decision is made to move forward, an array of other work is necessary before construction will start. At this point, a few other players get involved in the process such as lenders, insurance companies, bonding companies, multiple engineers, surveyors, appraisers, lawyers, the planning commission, the department of public works, the DEQ, utility companies, the parish council and a few others before it is time to break ground. Also at this point, a majority of the costs of actual construction should already be determined, and it cannot be overstated how important it is to have a solid contract in place with contractors for each aspect of construction. Although most costs will be set out in the contract(s) for construction, not all costs are known at this point in the process. It is certainly wise to budget liberally for the “miscellaneous” or unforeseen costs that might come up, because those costs are very likely to pop up without much notice. After the construction is complete, various approvals, bonds, etc. must be obtained and some waivers and inspections may also be required. This is also the time when the final touches would normally be made to make the subdivision ready for buyers. Once the final plat is finally recorded, the business of selling/closing lots begins. The purpose of residential development is to sell or build on lots, so during the development’s construction phase, it is customary to market the lots and try to sell as many lots as possible to be ready to close after the final plat is recorded. If the development or the owners of the development will be building in the development, planning for residential construction would also be done during the construction of the development. Preparing to build will usually take a week or two after the final plat is recorded before the first house will start going up, but once it starts, a developer wants it to keep moving as fast as the market will allow. Maintaining the subdivision to promote sales becomes the new focus of the developer at this point, and subdivision restrictions are extremely helpful for this goal. As described above, the residential development process is more complex than most people might think and each development has different challenges to overcome.