Becoming a developer

[Jared Lomker]

I have always been interested in development of land. Any recommendations on books or sources to better myself?

[Greg Dickerson]

Originally posted by @Bryan Hancock:

Development and the risks associated with it can vary considerably with the locale and product type.  Purchasing land in the path of progress is generally a long-term greedy play and many developers learn to "land bank" using various techniques to generate some cash flow on what is really a cash drain until you put the project in service.  If you learn to provide value to a developer in some way by providing your time, cash, locating good projects, vetting deals for suitability, etc. you can learn that way.  Working for larger development companies would be a good way to learn the ropes some.  

Note that there is a reason you see the collateral from banks largely consists of raw land when they have REOs.  Land is inherently very risky and subject to code changes and various of forms of municipal risk.  It is also more challenging to put into service because you often need to engage civil engineers, MEP engineers, architects, designers, work through construction loans, deal with subcontractors of various sorts, etc.  

Learning to manage development projects generally often means learning to raise and organize capital as well, which involves learning the securities laws and how to make projects salable to investors.  If you use debt you'll also need to learn how to organize your PFS for the bank and the games they'll play when developing new relationships with developers with their limited loan capacity for this type of project to reduce their concentration risk with their regulators.  

All told this is a lengthy process and going through a college course on it would help you a lot.  This REDI course:

https://www.redii.org/

Is something I looked into a while back too, but never pulled the trigger.  You may consider investigating that too.  Whatever path you take will not be cheap in time, energy, or cash.  Note that the most costly education is screwing things up in the real world and paying your "dumb tax" along the way.  I've paid more than my fair share of dumb tax in my development career.  

Great comments. The risks can greatly be reduced once you know what you’re doing and how to structure the contracts. I never close on the land until I get all entitlements and I tie the purchase price to the density of development I am going for. Land banking is for very deep pockets and long term wealth preservation. The have had changed dramatically over the past 20 years.

I have never found banks to play games as long as you are organized and qualified. You just need to find the right one for the project as they all have different appetites for different types of projects. 

I agree you will pay for your education one way or another. I learned by doing and being taken advantage of by my first mentor to the tune of several hundred thousand dollars but learned a ton from the experience and went on to make millions from that experience and using what I learned.