Episode 48: Investing: Basics of Being a Real Estate Developer

Written By Guest User

SUBSCRIBE TO THE PODCAST

The Question:

Can't find a home? A lack of inventory has pushed the pricing of real estate higher than we anticipated and it's causing many people to think in creative ways to enter the real estate investment world. Let's go over the basics of what it would take to be a real estate developer.

What is Real Estate Development?

Do you know what Real Estate Development is? In short, it’s buying empty, raw land to then build something on whether it’s a home, commercial property, or something else. “Developers” typically purchase the land and finance the building of the project.

A lack of inventory has pushed the pricing of real estate higher than we anticipated and it's causing many people to think in creative ways to enter the real estate investment world.

Agents are finding land and building a network and a team of supporters to develop the land.

And that got everyone to thinking, what about the everyday buyer?

Why would you consider developing a land you want to own or already own yourself?

Questions to ask yourself:

  1. Do you have the ability to commit to developing the land?

  2. Can you assemble a team to help you?

  3. Can you finance the development?

  4. Do you have the time it takes to develop the land?

Lori shared conversations that, "The one thing I'm hearing from contractors that I work with that build commercial, 'they're bidding on properties and building on bidding on builds is so challenging right now, Laurie, because you bid one number and then all of a sudden the prices increase and you're like, oh!"

Here's an example.

Say a new home build takes you 18 months.

$114 per square foot

1400 square foot home

Current average cost to build is $300,000

Expenses to sell the property are $27,000

Potential net income is $130,000+

Developing is a big commitment. But if you said yes to all of the above, then it may be for you.

Things you should know

If you're going to become a real estate developer, there are things you should know.

Forbes magazine has some great information on what to know.

  1. Understand Discipline And Differentiation

  2. Get Your Hands On Good Data

  3. Build Relationships First

  4. Be Creative

  5. Create Your Dream Team

  6. Consider Alternative Housing Arrangements

  7. Look At Environments That Create A Good Experience

  8. Know That Renters Are Savvier Than Ever

  9. Know Your Rights Regarding Land, Air And Water

  10. Turn To Pre-Manufactured Materials

  11. Implement Sustainable Development Goals

  12. Talk To Top Local Agents

  13. Activate Common Spaces

  14. Plan Ahead For Future Trends

Some Closing Thoughts

If you're intimidated by the idea of becoming a real estate developer, Lori shares this encouragement.

"So start small, start with a project that isn't overwhelming, maybe even just a remodel in the beginning. And then you step into, I'm going to buy some land. And then you step into now I'm going to develop that land and then you step into, Ooh. Now I'm building on that land, right? It's just layered one on top of the other, on top of the other."

unsplash-image-PFr50OBMowU.jpg

Check out these episodes:

Ready to start your path to homeownership?

Be sure to download your FREE PDF Guide of the Overview of Buying Your Home!

909.227.4196 | KW Realty, DRE 01794115 

Know someone interested in buying, selling, or investing in Real Estate?

Disclaimer: Please verify all information with the licensed professional of your choice.

Guest User
Previous

Episode 49: Investing: How To Be A Land Investor with Christina Walls of Land Profit Generator
Next

Episode 47: Investing: Different Ways to House Hack and Pay Off Your Mortgage