Real estate development is something I am passionate about. However, I wouldn’t be realistic if I said it was always an easy thing to do. There are a few roadblocks that tend to get in developers’ way. If you want to invest in real estate development, make sure you take these pain points into consideration.
Every real estate developer will tell you that zoning ordinances can be troublesome to work with. Some cities and municipalities only allow specific kinds of buildings in certain areas. There also may be ordinances surrounding the placement of the building on the property, and even the kinds of amenities you place inside the building and outside on the land. Before getting your heart set on a specific property idea, keep in mind that you will have to get your project approved by all necessary government departments prior to starting construction.
Unfortunately, real estate development often comes with unexpected costs to be aware of. You may need insurance, an extra set of materials, or even more manpower than you thought you would need. Make sure you have enough funding before you get halfway through a project and find out you have to stop because the well ran dry.
Lack of Contractors
Many people know a big reason for a lack of real estate development is a limited amount of construction workers. A lack of full-sized construction teams means more competition for the workers. Unless you are willing to pay a large amount of money or wait around until a group of contractors becomes available, you may not be able to start your project at all.
When I mentioned the unexpected costs and lack of contractors, I didn’t mention that time is a huge factor tied to these points. Each hiccup along the way will cost you more time and make the project last longer than anticipated. If you are in a time crunch and looking to get a project done ASAP, real estate development is definitely not the right option for you.
Even though real estate development is interesting and can be a good investment, there are quite a few roadblocks you can encounter along the way. Before you start setting plans in motion, make sure you’ve considered everything that can go wrong with your project.