Part 3 of 4 - So You Want To Be A Developer?

In the first two parts of this blog "So you want to be a developer" I took you through finding the land, determining if the parcel will work for your purposes, and gave you the formula we use in designing a project that will be both marketable; and profitable. In this blog we will go over making the offer, and design . (Please forgive the layout, the program seemed to have a mind of its own today!)

We found the land, we want to buy, what's next?  

For us, we are licensed Realtors, and handle most of our real estate transactions ourselves. For most of you, you will be working with a local Realtor that has shown you properties; and will be writing the offer for you, based on local values, and other criteria specific to you.

What should we offer? 

Every deal has to be weighed on its own merits, and criteria specific to the project being developed. Once again, looking at a project from our point of view, as developers that build for a specific niche (commercial investment property), we consider the following: (Please note, this is a basic list of some of what we take into consideration before we make the offer, and is not complete)  

1. What will the TOTAL costs to develop the project be?

• 2. What will the market value of the project upon completion be?

• 3. How much income will the building generate, based on comps?

• 4. Considering all the information, what is the maximum amount that 

    can be paid for the land, based on return we want to achieve?

Designing A Marketable Project:

One of our partners, though not an architect, does all of our initial design and layout.  His knowledge of building and computer design allows him to get a project through to a point where we can have an architect review it, and change any details necessary, before signing off, which helps keep our costs down. Every region has different criteria for those allowed to draw plans. Sometimes, using drafts people or designers can be the most cost effective choice. Other times, an experienced architect is required.

Site Design:

There are many elements that go into designing a successful investment project. The first thing people think of in design is what they will see. While that is important, it’s not the most important factor for a project that’s being designed to produce income. The first step to design is gathering all the information about the parcel that is available. Below is a partial list of what might be considered: 

1.       *Size of parcel
2.  
1.       *Topography, are there any challenges that will need to be addressed with
2.         the land? (sloping lot, environmentally sensitive areas, etc.)
3.  
5.       *Where are utility lines located?  (Sewer, water, electric, cable)
6.  
8.       *For the use that is planned, what will be required for parking?
9.  
11.       *What size building can we fit on the lot, taking into account the parking,    
12.         landscaping, setbacks, and other requirements?  
1.  
3.       *Will the best design be a 1 or 2 story building?
4.  
6.       *What is required as far as landscaping?
7.  
9.       *What is the access required for garbage pickup?

Once we have all the details, we then do a site layout plan, which shows where the location of the building, parking, landscaping, driveways, sidewalks, etc. will be. 

Architectural Design: 

Building design, whether on a house or a commercial building is where you can make or lose the most money. We believe that modern, contemporary style offers a timeless design, with high end appeal.  On commercial buildings high ceilings, wide hallways, and functional layout are key.  

In residential homes, most buyers want open living, which also eliminates the wasted space of hallways; and allows homeowners more livable space for their investment dollars. If your budget is tight, use color to add dimension to the rooms, rather than builder beige. Find space where you can, under the stairs, niches built into walls and showers, etc., be creative. 

Environmental footprint: 

All of us are becoming more aware of our environment; and learning about our ‘’carbon footprint” and we, as developers are finding more ways to reduce waste; and use more efficient products in our developments, without sacrificing performance. We recycle where we can, use sustainable building products where possible, and include outdoor space, bicycle racks, etc. in our projects. 

Helpful Hint for those considering building their own home:  

Another great idea is to go to one of the house plan sites online, www.dreamhomesource.com or www.coolhouseplans.com , and do a search based on your specific criteria (lot size, house size, bedrooms, baths, etc.) Look through the plans. When you find a floor plan that you like, print it up. Imagine living it, and how the traffic flows.

Often times, we are attracted to the visual looks of a house plan, but overlook the floorplan that goes with it. Before you spend money on a plan or having a design drawn, take advantage of the free designs online to get to know what would work for your family, or for your future tenants. Make notes. Do you like the placement of rooms? Is the laundry area close to the bedrooms? Are active rooms and noisy media far enough away from sleeping areas? What are the traffic patterns around furniture, and from the front door? Where will the TV go? Can furniture be moved to different configurations? If there's a pool in the backyard, is there access to a restroom from outside?  

I hope this has given you an overview of some of the things we consider when developing a project. Every area of the country is different. Each region has their customary way of transferring properties, handling escrows, and who pays for what etc., and on those items it's best to ask your real estate agent, or title company.

Thank you for taking the time to read my blog. I hope it's helped you to better understand our perspective as developer. Should you have any questions, please do not hesitate to ask. Your comments and ideas are always appreciated.