Becoming a Real Estate Developer

25 Replies

Good morning BP. I've been browsing on how to become a real estate developer and am looking for some insight. I've been working on a project to tap into the evolving tiny house market and have ZERO clue as to what a real estate developer does exactly. I get the concept of it, but the devil always lives in the details. I have a business plan, conceptual design, financial estimates, etc. etc.

I've read that being able to have access to $5-25MM is very important and since I'm a "no name", just starting out kind of guy there's risk involved and a lot of it. Especially when attempting to work in a somewhat "new" market.

Thoughts?

I would start by tracking down developers and talking to them about how they got started. Find out who they learn from, books they'd recommend, and places where you can learn. @Greg Dickerson is a successful developer and puts out a lot of great content

Originally posted by @Joe Callantine :

Good morning BP. I've been browsing on how to become a real estate developer and am looking for some insight. I've been working on a project to tap into the evolving tiny house market and have ZERO clue as to what a real estate developer does exactly. I get the concept of it, but the devil always lives in the details. I have a business plan, conceptual design, financial estimates, etc. etc.

I've read that being able to have access to $5-25MM is very important and since I'm a "no name", just starting out kind of guy there's risk involved and a lot of it. Especially when attempting to work in a somewhat "new" market.

Thoughts?

Joe - Real Estate developement is great business to be in. It’s a creative process that requires vision, leadership skills, serious expertise and capital as you mentioned. Like anything else RE Development has its own language and tricks of the trade of you will.

You really need to educate yourself on the market for tiny houses and the demand for rentals vs sales as some work better for each in different markets. 

Originally posted by @Taylor L. :

I would start by tracking down developers and talking to them about how they got started. Find out who they learn from, books they'd recommend, and places where you can learn. @Greg Dickerson is a successful developer and puts out a lot of great content

Thank you for the kind words Taylor.

 

@Greg Dickerson

I've been working on my pilot program for the last couple of years. Tiny houses are a different animal (even though they aren't really). I have a few jurisdictions on my side, received a seed investment of $250k and have a former county commissioner at my disposal. Along with an engineering firm at the ready, of whom helped me with the conceptual design.

All of the business stuff, RE stuff, Government stuff has all been a "learn as I go" thing. I'm an electrician by trade and sorting all the "stuff" out has been an interesting adventure. I'm to a point where I'm trying to identify a parcel to start working toward entitlements and round up the remaining capital I'll need to pull it all together. Competing with large developers is quite a challenge.

Money and land are the two things. I have to get the first one done first. Big vision: #1 Tiny House Community developer in the nation.

Originally posted by @Joe Callantine :

@Greg Dickerson

I've been working on my pilot program for the last couple of years. Tiny houses are a different animal (even though they aren't really). I have a few jurisdictions on my side, received a seed investment of $250k and have a former county commissioner at my disposal. Along with an engineering firm at the ready, of whom helped me with the conceptual design.

All of the business stuff, RE stuff, Government stuff has all been a "learn as I go" thing. I'm an electrician by trade and sorting all the "stuff" out has been an interesting adventure. I'm to a point where I'm trying to identify a parcel to start working toward entitlements and round up the remaining capital I'll need to pull it all together. Competing with large developers is quite a challenge.

Money and land are the two things. I have to get the first one done first. Big vision: #1 Tiny House Community developer in the nation.

Money will come if you have a good enough story, location, good numbers and you can convey your expertise in a way that gives comfort to the investors.  

@Karen Margrave - I'll dig a little deeper. The couple of threads I looked over were a couple years old and thought a fresh take would be good. Thank you.

@Greg Dickerson - I agree! I believe I have a good story (home ownership out of reach for so many), I believe my numbers are good, but I don't know what I don't know. That will come with experience but based on my own research and from what others have told me, my numbers are solid. As far as my expertise, well I'm building my own tiny house and am deeply connected to the tiny house market. I.E. I know these people. I relate to them and am part of the tribe. I have aligned myself with some important organizations like a third party inspection company to ensure the safety of the houses, and the Tiny Home Industry Association. THIA is still very much a fledgling in terms of what kind of weight it will carry in the future, so I'm kind of waiting.

Tiny houses are not a solution for all, but they are a solution for many. Even if it's just a stepping stone for one to have better control of their own personal finances in order to get out of debt or save up money for a more traditional home. There are many reasons people choose tiny living and the people come from all walks of life, creed, nationality and origin.

With humble gratitude,

Joe

Originally posted by @Joe Callantine :

@Karen Margrave - I'll dig a little deeper. The couple of threads I looked over were a couple years old and thought a fresh take would be good. Thank you.

@Greg Dickerson - I agree! I believe I have a good story (home ownership out of reach for so many), I believe my numbers are good, but I don't know what I don't know. That will come with experience but based on my own research and from what others have told me, my numbers are solid. As far as my expertise, well I'm building my own tiny house and am deeply connected to the tiny house market. I.E. I know these people. I relate to them and am part of the tribe. I have aligned myself with some important organizations like a third party inspection company to ensure the safety of the houses, and the Tiny Home Industry Association. THIA is still very much a fledgling in terms of what kind of weight it will carry in the future, so I'm kind of waiting.

Tiny houses are not a solution for all, but they are a solution for many. Even if it's just a stepping stone for one to have better control of their own personal finances in order to get out of debt or save up money for a more traditional home. There are many reasons people choose tiny living and the people come from all walks of life, creed, nationality and origin.

With humble gratitude,

Joe

It sounds like you definitely have the passion for the business. There’s a lot of opportunity in that ditch right now very popular for year-round living as well as short term rentals.

 Finding the right land and Controlling  development cost will be key to the success of your concept.

Jurisdictions are coming around to tiny homes or ADU's like in Portland any lot that has the space now that is zoned R 1 can have a ADU out right.. so the govey hurdle is done.. then its just demand.
there are companies that already do what your dreaming to do.. One is my old Aviation partner his company is relevanthomes in Oregon you can google.. and there are others who build them in factory's and crane them in.

so there are many who are a decade ahead of you I would study what they do.. also working in a jurisdiction that is anti development and density is probably not a smart thing to do.. find out where they want them then work there.

@Jay Hinrichs - Good point. The tiny house movement has been just that for the last decade. It's becoming a full fledged industry! Due to the popularity and governments coming around, now is the time to strike!

@Greg Dickerson - Indeed I do have the passion. There's been so many things that have happened in my life that has lead me to this point. This is my life's calling. Full time living, ADU's, Short term rentals are all options. Much like companies as Jay mentioned, there's examples of a tiny house hotel right in my own backyard - Lyons, CO. Most of the ones developed are one -offs. I wont stop at one. Every day I see posts and pleads on social media for people desperately needing a place to place their home without fear of being "red tagged".

I'm working to Bring Tiny, Home.

Originally posted by @Joe Callantine :

@Jay Hinrichs- Good point. The tiny house movement has been just that for the last decade. It's becoming a full fledged industry! Due to the popularity and governments coming around, now is the time to strike!

@Greg Dickerson - Indeed I do have the passion. There's been so many things that have happened in my life that has lead me to this point. This is my life's calling. Full time living, ADU's, Short term rentals are all options. Much like companies as Jay mentioned, there's examples of a tiny house hotel right in my own backyard - Lyons, CO. Most of the ones developed are one -offs. I wont stop at one. Every day I see posts and pleads on social media for people desperately needing a place to place their home without fear of being "red tagged".

I'm working to Bring Tiny, Home.

I really suggest you take a deep dive into the City Of Portland Oregons new development code for these units.. it will lead the nation.. and something you can share with regulators in your jurisdiction.

 

@Jay Hinrichs - Portland is a great example, but things aren't truly legal there. The ordinance passed is basically "turning a blind eye" while the housing market is in a state of crisis. Ultimately, it could lead to a permanent solution but it isn't there yet. My goal is to create the template that can be used as a solution nationwide. 

I can say that I will be gleaning all the good parts from various rules created to form the best of the best.

@Joe Callantine I have built several tiny units. My current project is two tiny houses (450 & 240 sq feet) on one small city lot. Just finished a rehab with a 160 sq ft tiny unit addition. And there have been others... I'd love to do a full development. I'm identifying some properties and moving that direction... I am also communicating and exploring some sort of partnership with Daniel at Western Slope Tiny House Company (find them on Facebook). Perhaps creating "modular" components that can be completed onsite. Nothing on wheels... 

My company website: rejuvenationhomesinc.com

Originally posted by @Joe Callantine :

@Jay Hinrichs - Portland is a great example, but things aren't truly legal there. The ordinance passed is basically "turning a blind eye" while the housing market is in a state of crisis. Ultimately, it could lead to a permanent solution but it isn't there yet. My goal is to create the template that can be used as a solution nationwide. 

I can say that I will be gleaning all the good parts from various rules created to form the best of the best.

well I beg to differ the city has definitely passed ordinances allowing R2 in any R1 zone.. but maybe I am not understanding what you are trying to do.. if its a development of small units then that is different of course. 

 

That's awesome @Teri Feeney Styers ! I'm sure Grand Junction and the western slope can use the more attainable housing, just like everywhere else! My focus is on THoWs. Simply because 75% or more of the movement is of the wheeled variety. Doing an on foundation development shouldn't be a huge challenge, assuming there's no minimum square footage rules.

@Jay Hinrichs - maybe the defining factor is the wheeled aspect? Like I mentioned above, that's my focus because that is the lion's share of the movement. Do you have a copy of Portland's legislation that approves THoWs in R1 and R2? Is this an ADU ruling?

@Joe Callantine I think as municipalities become more open to the concept of ADUs, casitas, granny cottages, etc. that you will see a movement away from the "wheels". Right now many wheeled THs are a way to skirt ordinances. If that weren't necessary then I think many (if not most) would prefer a permanent foundation and the options it provides (such as L-shape, sewer hook-up, etc). Here in Mesa County our planners are way ahead of the curve in what they allow and the minimal square footage. A legal ADU must have: a sleeping area of at least 77 sq ft with a closet (it can be a "studio" apartment), a bathroom (with its own sink), a cooking area (with its own sink), and then standard egress/ingress sizes.

Build your team. Read "More Important Than Money" by Robert Kiyosaki. It will teach you the importance of having Realtor, Attorney, Accountant, Engineer, Contractor, Banker, and partners. A developer can't do it without them.

@Teri Feeney Styers - You're missing a big aspect of the wheeled variety. Flexibility. By maintaining the mobility, when life changes one can take their house with them. The workforce these days is incredibly mobile and by not having to sell one's  house here, move somewhere else to live in temp housing at the new location while trying to find a new normal in a new place is daunting. Hooking up your house and taking it with you provides some piece of mind. Assuming there's a place to put it. I aim to provide a solution for that. Tiny houses have ALL the required amenities. Sleeping area, kitchen area, bathroom, etc. Many people just dont understand what a tiny house is, and what it is not.

@Michael Evans - Agreed and thank you for that. I'm working on that. I have my attorney, an engineering firm and an RE agent. Financial partners are a bit more challenging, because of the "new-ness" of tiny houses. Even though they aren't new. I have a couple contractors that could be a part of the mix, but nothing has been nailed down. I'll keep moving forward!

I agree with the tiny house concept. I am currently living in a 450 sqft guest house I built behind my home, all legal with permits. I am doing Airbnb with the main house, hoping to get enough income to pay the entire cost of the property. In other words, live for Free! 

@Joe Callantine I do understand what a THoW is - and it's pros and cons. As a "boomer" I am familiar with the RV lifestyle (although many RVers are no longer in the workforce). I don't disagree that a new version of mobile home parks could be attractive. Just pointing out that stationary tiny homes also have a demand; and that more municipalities should be giving them serious thought. 

@Joe Callantine   Would love to connect and hear more about what you're doing in the THoW community.  We just did a soft launch on our Tiny Home Hotel and RV Park in Meeker.  We've purchased 8 Tiny Homes so far and are doing short term rentals  with the units we own, but have the infrastructure in place to allow monthly and up to 6 month site rentals for people who own their own homes.  We're also considering allowing people to include their tiny homes in our rental pool.  

We've done a not insignificant amount of real estate investing across the Western Slope, but this is our first foray into tiny homes.   I think there is a lot of potential in the tiny home space, particularly with the high cost of construction in Colorado.

@Chris Montgomery I'm curious how the county up there handled that with you and your team...are they letting you park them indefinitely or are you having to pull camping permits or how did that go?  Seems like the thing we get most concerns on are related to waste management options (i.e. dumping, septic, pits, etc.) and not being able to "camp" indefinitely on certain pieces. 

@Chris Montgomery - That's awesome! Short term rentals have certainly paved ways and opened windows (not quite doors yet). Wee Casa did a fantastic job in Lyons, which lead to THoWs being approved as ADUs in the city of Lyons.

@Aaron Tobler - County and cities for that matter,  have to be handled almost as a case by case scenario on how they'd handle them. My goal and my company is actively working toward being the big name in tiny house community development on the front range, and eventually the nation. By and large, tiny house have normal plumbing, of which will connect to traditional septic or public utility. I did have a conversation the other day about one sanitation provider has provisions for handling the composting toilet setups as well.  I'll have to dig a little more into how that shakes out. Not all THoW owners have composting toilets, but a lot do.

@Aaron Tobler - Those are good questions, and as @Joe Callantine mentioned it's a case by case scenario for each county.  In our case we were able to purchase a closed RV park out of foreclosure.   We have full RV connections with septic, water and electricity to 100 sites in a location that was already zoned and approved for RVs,  so we were able to bypass a lot of the typical challenges.  That was part of our decision to go with Tiny Homes on Trailers rather than building anything permanent since the Tiny Homes effectively are treated like an RV.   We've re-opened the RV park at the front of the property and launched the 'tiny home hotel' on the back of the property.    Most of the tiny homes we purchased came with composting toilets which makes sense for people that are going from place to place.   We've replaced those with standard toilets so we can hook up directly to septic.  Then we skirt each tiny home and build floating decks beside each, so you end up with something that feels permanent but still has wheels under it.  

We plan to do similar things across the state and will have to deal with the utility infrastructure and zoning questions on a case by case basis. 

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