What Is Real Estate Development?
Real estate development is the act of finding and buying land, creating new buildings or making improvements to the already existing buildings (whether houses, apartments, office buildings, or shopping complexes) on that land, and then selling the real estate. Based on this, we define a real estate developer as a professional (or an entrepreneur) who specializes in this type of work.
Property development is a risky business; it can lead to highly lucrative returns, but it can also cause heavy losses. Nonetheless, this business is significant in the real estate investing world as investment properties don’t just happen; somebody must motivate and manage the creation of the investment properties in which we live and work. Moreover, due to the massive population growth and the growth of the real estate market, the need for successful developers is constant.
A successful real estate developer isn’t created overnight and is definitely not born. Unlike a real estate investor, becoming a real estate developer is a full-time job. Anyone can start a career as a real estate developer, but success in this business comes from a combination of attitude, experience, education, instinct, and the lessons learned from both victories and failures.
Characteristics to Succeed as a Real Estate Developer
The personal traits that make successful developers of an investment property are something that a real estate investor needs to check, as it will give him/her peace of mind before purchasing investment properties, and ensure attaining an investment property of a great quality.
There are many methods to become a real estate developer. Some entrepreneurs stumble into this business through long hours of hard work and luck. However, successful developers of an investment property attend college and study the foundations of developing real estate properties.
A real estate developer does not necessarily need to have intimate knowledge of every aspect of the investment properties development process. However, he/she must have a good understanding of the economy, the real estate market, the planning process, building construction, and finance, so he/she’ll be able to bring together a proficient team and manage it with credibility.
While property development can be very lucrative, stepping into this field without sufficient knowledge will get a real estate developer into trouble. Four-year degrees in studies such as Civil Engineering, Architecture, Urban Planning, or Business Real Estate would provide you with a grip on the property development cycle.
Therefore, before getting involved in property development, you should ask yourself:
- Do I have sufficient general property investment and real estate market experience?
- Do I have the knowledge required to undertake a property development?
- Have I assembled a good team around me?
- Do I have the time required to manage the project?
- Do I have deep enough pockets?
2. Excellent People Skills
The best real estate developer has excellent communication and interpersonal skills. He/she can communicate and relate to different people with ease and quickly build relationships. This is an important characteristic to succeed as a real estate developer as he/she will have to deal with a large number of people including real estate investors, buyers, sellers, lenders, builders, architects, consultants, and many more! Therefore, a real estate developer needs to be diplomatic and have leadership skills in order to build strong ties and get the most out of these relationships.
3. Risk Tolerance
Just as real estate investing is risky, so is the development of real estate properties as there is no guarantee that your investments will pay off. For this reason, to succeed as a real estate developer, you must be prone to taking risks!
Some people find it very hard to take risks – these are not cut for this business. A successful real estate developer understands that with big risks can bring big rewards. They will make calculations and measure all the risks related to an investment. Additionally, they always look for ways to minimize these risks.
4. Problem Solving Skills
Developers of real estate properties will find themselves facing roadblocks along the way as there are so many ways for things to go wrong. Therefore, problem-solving skills are a must to achieve success. A well experienced real estate developer knows how to solve these problems and understands that there might be more than one solution.
Successful developers of an investment property are always ready for both the expected and the unexpected. When a problem occurs, they are quick enough to solve the problem on time and under budget, and to mitigate any damage.
Every property development project starts with an idea, whether it’s for a specific use of a location or a vision for what a certain community might need. Successful developers of real estate properties are characterized as creative individuals as they’re always looking ahead at what demand might occur in the future. A successful real estate developer steps outside the box and comes up with exciting designs, new building materials, and cutting-edge construction methods. Creativity is an important trait for successful developers of real estate properties as, without it, we wouldn’t have the skyscrapers, town centers, and all the places we call home and work.
6. Taking Hard Decisions
When developing real estate properties, one challenge that a developer of an investment property faces is the battle between delivering on time and delivering top quality. To succeed as a real estate developer, you have to be able to manage and balance between quality and time delivery by keeping track of the construction’s stages in order to meet deadlines and keep the real estate investor satisfied.
In addition, successful developers of real estate properties have an innate ability to see the big picture. They are focused and patient to see their vision gradually become a reality, even if it means making mistakes from time to time.
7. Ability to Spot Potential
In real estate investing, great opportunities are usually few – and when they do come along, they definitely don’t remain forever. A successful real estate developer has the ability to spot a good opportunity and do a quick feasibility to determine its potential. Moreover, the real estate market is very unpredictable, thus to succeed as a real estate developer, always keep up with the recent real estate market trends.