So you want to be a developer?
Wednesday, February 06
This is my first blog post, so please give me grace. For those that don't know me, I am part of a family owned real estate development; and construction company. Each of us have our own areas of specialization. What I don't know, someone else does, etc. I myself am licensed in real estate, and construction, with over 25 years experience. I don't actually physically work on the jobs, but I do go out on every job. I know construction and development. (along with real estate, marketing, etc.)
On Biggerpockets I often get questions from people wanting to be developers, or wanting to understand what it is that developers do. I'm going to try to answer those questions in this blog.
What is it that developers do?
The answer is simple. Have you ever looked at a parcel of land and imagined what you'd put there? What type of business would be good in the area, what style of building would look good there? Developers are the ones that know how to bring all the pieces together to get it from imagination to reality.
Of course, just because we can imagine it doesn't mean it's possible to do. We have to work within the limitations of local zoning for the parcel, etc. In addition, there are specific requirements for each use, such as parking, landscaping, etc.
How to decide which projects to do?
Above I said just because we can imagine it doesn't mean it's possible to do, at the same time, just because it's possible to do, doesn't mean it's financially viable. It's a balancing act. Once we know what the project will be, we begin to figure all the costs involved in its development, then balance that against the amount of rents the space can generate, and calculate the market value of the project upon completion to decide if it's financially feasible.
We know that business owners and tenants want professional looking space with great architectural design, yet they want to keep as much of their hard earned money as they possibly can. That means learning to get the maximum amount of bang for our investment buck. In addition, investors want well located, marketable space, at a price that will produce a good return, and appreciate in value over the years. We, as developers need to earn a reasonable profit. All of these things have to be weighed and balanced against each other to determine whether or not a project can be successful.
Is that all there is to development?
Not even close. What you see with your eyes when a building is going up is actually moving into the final stages of developing a project. I will take you through the stages from when we first locate the parcel to the final build out, in later blogs. (Dealing with govt. entities, financing, construction, marketing, etc.)
I hope I've helped begin to answer your questions on development. Please post any questions or comments. Thank you for your time!