Real estate development is a potentially lucrative field for anyone looking to invest. It takes a great leader to become a developer, as collaborating, planning, and executing a build ultimately falls back on the developer. Before you commit to diving headfirst into the world of real estate development, read this article to find out what it really takes to start.
Part 1: Pre-Construction
Although most people think of construction when they think of development, there are actually several steps that come before it. You will need to acquire financing, find legal professionals, and search for a property. Builders and architects will need to draw up plans based off of the zoning laws of the township, and the land will need to be surveyed to ensure the integrity of the land. Beyond this, there will be tons of paperwork, many fees, and constant collaboration. You will need to know where you are with each member of your team at all times, as they may not talk to one another.
Unfortunately, many people underestimate the amount of time, effort, and money all of this takes. Some developers get partway through this process and realize they do not have the funds or mental capacity to deal with a project of this size. My advice: imagine how hard you think this will be and expect it to be 10 times harder, at least. Then, you can realistically decide if this is right for you.
Part 2: Construction
If you managed to get through all of the pre-building paperwork, it is now time to move on to construction. Any experienced developer will tell you to expect construction to take several months (or even years!) longer than you planned. Construction workers can run into all kinds of problems, such as delayed materials or hitting a ground pipe. Even more frustrating than the time delay can be the money problem. Any time your construction team runs into an issue, it can cost thousands of dollars. Make sure you have enough financing to cover anything that could arise and be prepared to be patient.
Part 3: Post-Construction
Once your new house or office building is completed, it is time to sell the property or rent it out. This process should be self-explanatory, but again, make sure to account for plenty of time between the end of construction and a finalized contract. This time will also cost you money, as the development loans will need to be repaid one way or another.
Although real estate development can be stressful, time-consuming, and even risky, it is ultimately a very rewarding process. Not only will you have made a (hopefully) lucrative investment, but you will have a major project to show for it. Still, before you decide to head into a new development project, make sure to carefully consider whether or not you are equipped to handle all three parts of a development project.