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What Is a Real Estate Developer?
A real estate developer is an individual or business responsible for the financing, building, marketing, and management of any real estate development project. A developer may purchase a property or partner with its owners to rebuild on the land, often with the help of real estate development companies.
Developers will often manage the construction of a new build even though they are not general contractors. Real estate development requires no authorization or training but some developers receive formal education as real estate brokers, real estate agents, and general contractors, all of which require some level of state-mandated licensing.
What Does a Real Estate Developer Do?
A real estate developer scouts new real estate projects, buys land or existing property, and supervises the building and eventual management of the new space. A developer is also responsible for finding investors and lenders (or taking out a business loan) to fund the developments.
For a new building, a real estate developer will typically buy a tract of land and obtain the necessary financing and public approval (like zoning laws and building codes) to begin construction. The developer will also oversee the design and construction of the units before they begin to rent them out. They may also sell the property off for a profit at the end of the process.
How to Become a Real Estate Developer
Becoming a real estate developer usually requires a bit of experience in a real-estate related field. Here are some tips on becoming a real estate developer.
- Use your knowledge to find your space in the market. When you’re starting out in this field you want to establish your expertise in one area. You can concentrate on one type of real estate (either commercial or residential projects) or even one step in the real estate development process, like renovations to existing buildings or property management. Consider your relationships and knowledge within the field, and choose a concentration that you’ll be able to excel in.
- Study up on real estate regulations. Real estate professionals need to learn the long list of state and local regulations and rules for buildings to be proficient in their jobs. These can include zoning requirements from the local government or national environmental codes. Knowing these rules can prevent you from wasting time on property that is not viable. It also means that you can maintain your buildings in accordance with the latest safety codes.
- Collaborate with people you trust. Real estate development is a highly collaborative process that requires people to work together across many different disciplines. From the attorneys you work with to structure your business to the architects designing your buildings, a well-rounded real estate development team will include different reliable professionals that can help in each step of the property development process.
- Work with real estate investors. Real estate development requires a large amount of capital investment to purchase worthwhile properties. More likely than not, most real estate developers will not be able to finance a project all by themselves, so you will need to find investors. Build a portfolio of successful past real estate projects, and make sure to network as much as possible.
- Research the real estate market. Know the demographics of any established or up-and-coming areas you might be interested in. For instance, if you’re building in an area full of retirees looking to downsize, you’d probably want to purchase land for a development of small single-family homes rather than townhouses or condos, which are better for young families.