How Much Does It Cost To Develop A Piece Of Land?

‍Future land owners find it difficult to speculate on the cost of developing land. Let's find out what it costs to make raw land into developed land.

There are many factors that go into knowing what it will cost to develop land – and many unknowns too. Land development can be an expensive but worthwhile investment.

The price to develop land depends almost entirely on what you plan to do with the land. You should, however, expect to spend at least a few thousand between permits to build on land having environmental planning done, including a drain field and land survey.

We'll walk you through a few of the plans you'll need to have, along with the potential costs to having them work. We'll also go into some detail about what development costs will be after permits and pre-development processes happen.

We've done plenty of research on land development and would like to share what we know with you so that you are better prepared when buying land.

‍What are the initial costs to buying land and developing land?

Land Survey

Among the first steps you'll need to take in order to develop land is to get a land survey. A land survey determines the exact boundaries and produces a description of the exact boundaries of the land, including settling potential disputes on anything from the presence of fences to driveways. The land survey communicates to the buyer and probably the lender exactly what is being purchased.

A land survey has a range of costs. A basic survey for a plot can run from $200 to $800 depending on the size of the lot and the city. A larger survey can cost between $2,000 to $3,000.

Perc test

The perc test, or percolation test, is done by a soils engineer to determine the height of the water table and is a major factor in determining the drain field as well as sewage conditions. The perc test is rather important in deciding whether or not land can have a building on it. The perc test costs between $750 to $3000 depending on the area and how much testing needs to be done, which potentially includes a deeper hole test or a test for the water levels during high water season.

Property line survey

This is one of the least expensive tests, and is fairly simple. Most lots have metal pins in the ground that indicate where the property line is located. A city representative will walk the lines with a metal detector and make note of exactly where property lines are marked. This usually costs $100 to $200.

Engineered Drain field design

This can be pricey, though it depends entirely on the contents of your soil. If you need lots of soil engineered for the purpose of drainage, this can run all the way up to $20,000. A home where nothing much is required might not have a cost at all.

Site plan

This is more administrative and involves a plan sent to your city government with exact plans about what you are building. These can cost from $100 to $1300 depending on the details in the plan and who you hire for the purpose. You might also pay a cost to the city to have the plan considered.

Utilities

Most new developments will need, or at least want, running water, sewage, electric, and natural gas – potentially including cable for Internet and TV. The cost to actually build copper piping or sewage pipes to carry water and waste to and fro tends to cost between $25 to $100 per foot – so hopefully you have a pipe to tap into fairly near your property. Part of the cost of installing utilities comes from the need to excavate parts of the property and the labor involved in piecing together new pipes for the purpose.

Do some places cost more to develop than others?

Yes. One factor is the high cost of in demand labor. Another obstacle that raises prices is that in some parts of the country, including California and New York, cities don't necessarily want further development so they raise the price of fees and permits so that fewer companies and people want to develop land. These fees are often called “Impact Fees” and they can vary greatly from city and state, with more than half of cities and states charging something for the purpose. If you are in a place that doesn't charge an impact fee, good for you!

Are there legal fees for developing land?

Most of the legal fees for developing land are potentially for making a zoning variance request, doing a title search, and closing costs associated with the land. While you'll likely have to pay closing costs, other legal fees depend more upon how you plan to use the land and whether or not you need legal help.

How do I budget for this?

When developing land, there is a decent chance you are going to go over budget. We recommend assuming you will pay twice as much as you expect to, and that's without getting into building materials yet. Assuming that you will pay twice as much will help get over the shock of administrative fees and anything else that might pop up unexpectedly. The price of materials could also rise during construction, especially for lumber.

If you don't use the higher budget, you can then put the money toward something else instead!

Earthwork fees

The above are mostly admin fees before you begin building. Here are some actions you might have to take as well – not including costs because they vary significantly.

Clearing trees and foliage

While trees are beautiful and provide oxygen, they might not be the plants to have on your lot. You should plan to have trees cut and potentially shredded.

Grading

You'll need to have soil graded and flat to build a foundation for a building or a hose. This involves heavy equipment.

Excavation

You'll probably need excavation to bury water lines – or build a swimming pool. You'll also probably pay for having dirt added, in some cases.

Drainage

Water has to go somewhere. Many homes will have drains added above and beneath the soil to have water sent for treatment or elsewhere.

Getting estimates

You'll want to ask for estimates on everything from legal fees to planning fees – and probably ask at least a couple of vendors to ensure you get the right people doing the right work. Estimates will also greatly help keep costs accurate so you aren't surprised by something a vendor missed, or something that you didn't expect to be able to afford.

Part of the reason land development is expensive comes from administrative fees and unexpected expenses occurring due to unpredictable events.

Should I hire a lawyer?

If you don't understand real estate law, it is definitely a good idea. Your realtor might also recommend you get a lawyer so you better know what you are getting into, and get a better grasp of complex paperwork and rules. While lawyers are a rather expensive part of land development, they can also keep you out of hot water in the future, especially if you don't have the time or ability to read and understand legal documents.