If you’re wondering how to get into real estate development, we’ve got you covered. There are a lot of different facets to the industry, and it can be overwhelming at first. But don’t worry – here are some essential tips for success in real estate development.
How to Get Into Real Estate Development
Before we dive into the nitty-gritty details of how to get into real estate development, let us first define what is a real estate developer.
A real estate developer is an individual or company that builds or renovates homes, office buildings, shopping centers, or industrial complexes.
These developments often turn vacant or abandoned land into new homes and businesses.
A real estate developer sees the potential in a piece of land or property and comes up with the resources to develop it.
The entire process includes creating a plan for real estate development, finding investors to finance the project, and managing the construction process from start to finish.
Developers can estimate how much revenue the new business will generate.
The project can take years to build.
A real estate developer must be skilled in the following areas:
- Land acquisition
- Market studies
- Building permits
- Project financing and financial analysis
- Building development
- Building renovations
You can become a real estate developer right away but it takes years of work and experience before you’ll become an expert in all aspects of real estate development.
There is no one way to become a developer, but several career paths can lead you to the profession. Careers in construction, real estate, architecture, and the law can all lead to development, but it takes the right preparation and knowledge.
A bachelor’s degree in real estate, business, or a similar field is helpful in becoming a developer. You’ll also need strong organizational skills, a basic understanding of the real estate industry, and a willingness to be entrepreneurial.
Many developers have taken undergraduate or graduate courses in real estate development, or have even earned MBAs in the subject.
Real estate certifications and courses from groups like the CCIM Institute, NAIOP, or the Society of Industrial and Office Realtors also provide good resources.
The following is a typical path for real estate developers:
- Undergraduate degree in real estate and finance
- MBA in finance
- CCIM Institute
- Society of Industrial and Office Realtors
- Internship with a real estate development program
- Two or more years working in the real estate industry
- Relationship building
- Understanding lease agreements, proformas, joint venture agreements, and other aspects of the development business
How Much Money Do Developers Make?
Because real estate development companies take on the most risk, they also have the biggest rewards.
The size of the project, the region, whether it’s commercial or residential, and the current state of the real estate market all impact how much you’ll earn as a developer.
A real estate tycoon can rake in millions from a big-ticket property, but their revenue is highly dependent on the success of each project.
Real Estate Development Career Path Options
An ambitious real estate entrepreneur can start off in many directions. Some start as agents who, after purchasing and renovating homes, sell them for a handsome profit.
After working for some time in the real estate industry, you may get the chance to work with urban and regional planners, architects, and builders to develop a new condo project. This would be a great career option for anyone interested in real estate development.
Most people who go into real estate development will work for companies that focus on specific types of real estate such as retail or resort development.
Another option is working as a developer for a consulting firm that assists clients with developing their products.
What Does a Real Estate Developer Do?
As a developer, you must be able to handle chaos and thrive from it. For those who aren’t fond of being confined to a cubicle, constantly facing new situations and challenges can be fun.
Daily responsibilities include:
- Visiting land plots and properties
- Balancing books
- Meeting with contractors and investors
- Responding to press outlets
- Scheduling and time management
- Ensure that buildings and properties are up to code
- Researching new projects
Step-by-Step Guide on How to Be a Real Estate Developer
Build relationships. Networking is the key to success as a real estate professional. You build your business by getting to know people and helping them. Once they know you, like you, and trust that you’re going to deliver on what you promise, they will want to hire you to do more work for them.
Find capital. If you don’t have a lot of capital to start with, you’ll need to find a partner who can fund you. Learn about the business and find a partner you can trust. You can also look into what commercial loans are available for real estate, and what the terms will be.
Buy land. Now that you have some capital, you need to find a place to build. You can buy vacant lots, or you can buy older properties to tear down and rebuild.
Develop a plan. When developing a new building, you’ll first have to study the local market to determine what type of structure to build. You’ll need to gain approval from the government before you can start construction.
Build. Once you’ve received approval for construction, you can go ahead with building a brand-new structure or renovating an older property.
Sell. Once you’ve completed the project, it’s time to sell it. Your realtor’s offer of extra commissions may tempt you, but it might be a better idea to focus on finding new clients.
Continue your education. The real estate industry is all about understanding the needs of customers and designing projects that fill those needs. Learn about your market every single day, and remember that no two projects are ever the same.
How Much Money Do You Need to Start a Development Business?
You don’t need to have your own money to invest in real estate. Most developers use investors, banks, or commercial loans to finance their projects.
These investors are REITs, pensions, private equity, and other types of private money.
You may have to start by reaching out to friends and family, as well as private investors, such as those who are retired and looking for alternative sources of income. These individuals may also be interested in socially beneficial projects such as building affordable houses.
If you’re new to real estate development, you’ll probably need to put together a business plan to show potential investors or lenders. This will help them understand your proposed project and decide whether or not they want to provide funding.
When taking out a business loan, be sure to compare rates from multiple lenders to get the best deal possible. This will ensure that you’re able to save money on your loan and use it for other business expenses.
Build Your Brand for Future Projects
As in any industry, your success with your first project will be your audition for the next one. It’s best to start with a small, simple project that you can learn from, and then move on to larger, more complex projects once you understand the basics.
Once you’ve proven yourself to be an expert in your field, investors will be lining up to work with you on future endeavors.
These tips on how to get into real estate development can help you get started. From building your brand to networking and understanding the entitlement process, these tips will set you up for a successful career in real estate development.