Interested in becoming a real estate developer? Great! This article will delve into the details of becoming a real estate developer, the requirements, and the traits and practices that make up a successful real estate developer.
What Is a Real Estate Developer?
A real estate developer is a professional in the field of real estate who manages development projects for new real estate properties. A real estate developer is very similar to a movie producer. They are the ones who manage the different aspects of a development project, find the appropriate staff to hire, and make most major decisions related to the construction of new real estate properties.
Just like a movie producer is responsible for finding the rights talents for the creation of the movie, a real estate developer, before developing the actual property, needs to develop a strong network of real estate professionals in a variety of fields that are required for the development of the project.
The most common type of real estate development projects is commercial real estate properties. Real estate developers with enough experience in the field tend to focus on the creation of commercial real estate projects such as shopping malls, resorts, condominium projects, farming lands, warehouses, office buildings, and apartment buildings.
Related: Real Estate Developer vs. Real Estate Investor: What’s the Better Career Choice for You?
What Professionals Does a Real Estate Developer Work With?
A real estate developer does not necessarily have to have any particular level of education or a specialty in a certain field, although a degree in a real estate related field could be invaluable for any real estate developer. Additionally, a real estate developer’s background could include experience in any of the fields that are related to the real estate development project, and he/she can fill the role of any of the other professionals that he/she will be working with depending on his/her own experience or education.
These are the main professionals whom a real estate developer will need to hire and/or work with:
- Architect
- Financial Asset Manager
- Banker
- Attorney
- General Contractors
- Civil Engineer
- Broker
- Appraiser
- Tenants
Among others, these individuals and partners are all necessary for any successful development project. If the real estate developer has experience in any of these related fields, he/she can fill that position.
What Are the Requirements for Becoming a Real Estate Developer?
There are no specific requirements for becoming a real estate developer. Official education or a degree in a real estate related field, however, is highly recommended, and it will make the process of developing real estate much easier and less risky, because an educated real estate developer will have more knowledge of the different risks and obstacles that he/she might face, in addition to having more knowledge about all other aspects of the development project.
Additionally, a real estate developer needs to have a set of skills and talents that most real estate investors don’t need.
Real estate investors generally have access to numerous methods for investing in real estate, some of which don’t require their involvement and decision making at all. Real estate developers, on the other hand, require deep knowledge of real estate and other related fields, and they need to be good at planning for the short term as well as the long term using the resources that they have.
What Are the Traits of a Good Real Estate Developer?
A good real estate developer will have a set of traits and skills that will greatly affect their chances for success:
- A Network of Relationships: As mentioned above, in order for a real estate developer to manage a development project, he/she needs the help of many professionals in a number of different fields. A good real estate developer will have access to a network of professionals in those fields, allowing him/her to seek the advice and to hire people whom he/she trusts and who share a similar vision of what the end result of the development project will be.
- Ready to Take on the Risk: A real estate development project is not a small venture to take. It requires a large number of financial resources to be invested, and a typical real estate development project will cost a high amount of money to cover all the expenses: from purchasing the land, through building materials and the actual construction, to the different fees for hiring professionals. These expenses could result in a drastic loss if the real estate development project ends up in failure. If you’re not willing to face the risks, then a career as a real estate developer might not be cut out for you.
- Good Problem Solver: A good real estate developer should be prepared to face and solve all kinds of problems that are both common and rare in the real estate development business. Even when working with a limited amount of resources or against the clock, a real estate developer should always be able to find quick solutions to any problems that may arise. The good thing is that a good real estate developer has access to a network of trustworthy and reliable professionals, and he/she can always seek the advice of these professionals for solving the different problems.
- Be Creative: An average real estate developer will seek the development of real estate projects to fulfill the needs of the market that he/she is investing in. However, in markets where competition is high, a good real estate developer will need to stand out in order to get the project to sell and to succeed. Creativity in real estate development has a very high ceiling level, and it’s up for the real estate developer to stand out by creating projects that are unique, fulfill the needs of the market, and attract people.
Related: Is Creative Real Estate Investing Right for You?
How Do You Succeed as a Real Estate Developer?
So, you’ve reached this point and you’re certain that you have what it takes to become a real estate developer. You have a degree in a real estate related field, you’ve gathered a number of good partners and professionals around you to help you develop a project, and you have the financial means to start a real estate development project.
What’s next? How do you find success as a real estate developer?
- Work as an employee in the real estate business
One of the best places to start your career as a real estate developer is by working as an employee in a real estate related field. This will allow you to gain some experience and additional knowledge in the market, introduce you to additional professionals in the field, and provide you with the opportunity to learn about the common mistakes and how to plan around them in the real estate business.
- Establish a legal identity for your business
Naturally, a career as a real estate developer poses very high financial risks. So, in order to minimize those risks and gain liability protection, it is recommended to form a business entity such as a corporation or a limited liability company. While this will result in higher fees and additional accounting issues, the added effort is definitely worth the risk of losing your personal finances due to the failure of a real estate development project.
- Work with construction firms and professional contractors
Some of the best practice that you can have at a minimal risk before investing your money in a real estate development project is to work on smaller projects with construction firms and professional contractors. This will give you additional insights and experience in working in those fields. A good place to start would be to work on improving existing real estate properties, which will build up your relationship with real estate professionals and ensure that you can rely on them for any future development projects.
- Research the market and assess it
Just like any other type of real estate investment career, a real estate developer should definitely conduct market research and assess the market to be able to detect opportunities and avoid wasted efforts and, possibly, losing money. Learn about the different assessment tools and metrics used to evaluate a development project and speculate its profitability, or hire a professional to do the research for you.
Related: Comparative Market Analysis: Real Estate Investing
- Target the commercial real estate market
Many real estate developers believe that commercial real estate is easier to get into than residential real estate as a real estate developer. In truth, commercial real estate isn’t “easier” to develop, but it often results in higher return on investment than the residential real estate. This is because commercial real estate typically deals with higher cash values, and there are fewer government regulations that control and restrict it than the residential real estate.
- Invest in your own business
Last but definitely not least, a successful real estate developer knows that the best investment is his/her own business. Instead of spending your profits on personal consumption and leisure, invest your money in additional development projects to build up your portfolio and accelerate the growth of your business.
Bottom Line
A career as a real estate developer can certainly be a great choice for earning high sums of profit in real estate investing. Although real estate development isn’t cut out for everyone, anyone is able to learn and build up experience to the point where he/she can develop his/her own real estate projects.
Whether you’re a real estate enthusiast, investor, or developer, the world of real estate will always have an opportunity for you to make money. If a career as a real estate developer is not for you, feel free to read our blogs on becoming a real estate investor. The best part about it? You will be able to use Mashvisor to make your investment venture much easier, giving you the opportunity to make high profits at a minimal amount of risk.