Real estate development companies must address many of the exact requirements of other businesses – ideal legal structures, tax considerations and planning, insurance needs, office administration, bookkeeping, and human resources. In addition, developers must have access to reliable third-party consultants for critical functions throughout a development project.
Design
Real estate development is a highly competitive industry, and it can be difficult for newcomers to acquire the track record needed to demonstrate their ability to manage large projects. Many new developers turn to property flips and rehabs to build a portfolio of work, or they may join a real estate development firm to gain hands-on experience and build a network.
The success of a development project hinges on the site selection and assessment process. Developers must be experts at identifying a property’s potential and limitations and understand the market well enough to evaluate demand.
The development process also requires extensive use of 3rd party consultants, such as civil engineers, architects, general and subcontractors, surveyors, and land title companies. Developers must be adept at cultivating and managing relationships to ensure the best possible results from these specialists.
Marketing
Real estate development firms are primarily responsible for transforming vacant land or used properties into ready-to-sell or rent real estate projects like Your Home Wichita. Their projects include purchasing land, planning and designing, constructing, and marketing.
Developing a project from start to finish takes immense coordination and relationship building. This is why many real estate developers begin their careers as commercial real estate brokers, where they learn the ins and outs of both buyer and seller side dynamics.
A real estate developer must be able to make decisions consistent with the project’s overall goals. This is especially true when it comes to sourcing property and obtaining financing.
Planning
The planning process is critical to the success of a real estate development project. It starts with identifying the goals of your business and setting measurable targets that you can use to gauge your progress. These objectives can include achieving a specific return on investment or ensuring that your property has a high occupancy rate.
A good plan also includes market research. This involves studying demographics, analyzing competition, and staying updated on economic trends. This will help you understand the potential demand for your real estate development project and ensure that it meets customer needs. It will also help you develop a clear roadmap for the entire project. This will minimize mistakes and increase your chances of completing the project successfully.
Financing
Real estate development can be a costly business. Even the most experienced developers often have to invest some of their capital. Historically, this type of financing has been reserved for the wealthy and well-connected.
The most successful real estate developers build strong relationships with investors. This allows them to finance projects faster and more efficiently.
Having some clients lined up before construction is also a good idea. This is especially important with large CRE spaces. In this way, you can avoid waiting for years to see your return on investment. Also, this helps you negotiate better terms with lenders. This is known as a capital stack. It refers to the different types of debt and equity that go into a project.
Construction
Real estate development firms are responsible for building real estate projects from the ground up. They typically build a mix of residential and commercial properties, such as apartment buildings, shopping centers, and office buildings.
Before the construction phase starts, the firm must conduct a thorough pre-development analysis of each property. This includes identifying zoning limitations, utility access, and environmental considerations. They also prepare a detailed development proforma, including each project’s hard and soft costs.
Real estate developers often transition into the role of other real estate fields, such as brokerage, investment and acquisitions, engineering, and contracting.
