The Canadian real estate market presents investors with a wide range of appealing financial opportunities. For both domestic and foreign land developers, a project in Canada has the potential to yield impressive and stable ROI for many years to come. As with any large real estate investment, the keys to success lie in thorough planning, foundational subject matter expertise, and familiarity with the local market regulations.
The decision to develop a property begins with a variety of motivations, depending on the investor. Your unique goals dictate not only the type of property you purchase and build, but also your time commitment, capital budget, and financing.
A property that is developed for the purpose of being quickly sold as a one-time investment is very different than a property that is developed to produce rental income for many years. Gaining a thorough understanding of your “big picture” end goals will help you to choose effectively when faced with all the smaller decisions along the way.
Once you have a clear picture of your goal destination, there are a few initial questions that are worth asking:
– In what capacity will I be making the purchase?
Will the purchase be made by a business, a joint venture, or a trust?
– What is my budget?
Your method of financing and investment goals will determine how much money you want to spend.
– Who is on my team?
Do you have a team of advisors? You’ll need an accountant, architect, legal counsel, engineer, surveyor, and town planner to name a few.
Choosing the right site
There are so many factors involved in determining the best property to achieve your goals. Although of course your heart must be in the purchase, it needs to be thoroughly vetted by your head first. Consider the following factors:
What has the land been zoned for? Consider all the factors that could limit your development plans, including natural landscape factors like roadworks, parking, sewage, access to water, vegetation, and the curvature of the land. At this stage, it’s wise to conduct research yourself first, so that you can maximize the efficacy of initial meetings with your team members by arriving with insightful and relevant questions.
Now that you have an understanding of the risks, you’re better equipped to do the math on the profit. How much money do you think it will cost to develop the project? What do your team members anticipate it could sell for?
The terms of the deal will determine how quickly you can begin construction. Here’s where it’s helpful to have your accountant and legal counsel consult. A properly structured deal with result in a profitable investment.
The team at Zeifmans has 60 years of experience assisting our clients in choosing, structuring, and investing in the most profitable land development deals. Let’s take a look at the most important factors that we consider when advising our clients throughout each of the 6 development phases.
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