How to Start A Small Real Estate Development Company

If you’ve always dreamed of being a real estate developer, you need to know how to start a successful company. Here are some of the best tips on how you can start a small real estate development company and make it successful.

1.   Site Selection, Urban Design, Site Planning and Civil Engineering

Securing a site is one of the most important decisions when it comes to starting a real estate project. Some of the important things to consider here include what you can or can’t do with the site and how your real estate project will be developed on the site. You can use these skills to compare different sites, blend in perfectly with the neighborhood, handle any land issues that might come up as well as utility and water conditions effortlessly.

2.   Entitlements

Here, you need to know what you’re entitled to do with the land, once you find the right one. Your entitlements, however, will be governed by the zoning code provided by the local municipality. As a developer, you need to comprehend what you can do with your site. Of course, you’re governed by the existing rules of setbacks, the height or size of your building, parking requirements. Also, you need to know whether there are risks associated with getting a variance or changing the classification of the land. You need to get in touch with the people in charge of issuing approvals, to make sure everything progresses accordingly.

 

3.   Real Estate Deal Structure, Proformas And Finance

Any real estate project will be successful depending on the contracts and finances involved. A simple project should have an operating partner who oversees the entire process as well as a capital partner who is in charge of providing capital for investment purposes. The two partners can seek more financing from other financial institutions. Using a proforma, they can track how the real estate development makes money through rent and sales as well as the distribution of the profits to the partners and loan repayment to the bank.

4.    Building Design

It is also referred to as the mechanical, architecture, structural and electrical engineering. It’s the basics of how the building performs. As a developer, you need to know the basic building codes to optimize functionality and size of each unit. Also, you can avoid spending a lot of money on the construction and installing the mechanical structures. Tenants will appreciate your superior materials and exterior detailing that’s appropriate to the context and your building will be durable for a long time.

 

5.   Construction and Construction Management

Project managers and skilled tradesmen are the key to the success of renovation or construction of a building. A construction manager or general contractor should leverage the work effort or knowledge of welders, plumbers, carpenters, roofers, electricians or installers. Thanks to contingency reserves and thorough planning, a small developer can manage the entire process as well as the risks involved.

6.   Marketing, Sales, Leasing and Property Management

Once the construction is completed, you can sell it, lease or maintain it frequently. You can hire brokers or agents to attract tenants or buyers as well as prepare the required paperwork to guarantee the best applicants. If you’re retaining the ownership of the building, there should be someone on call to handle the maintenance issues and that’s where a property manager comes in handy.

7.  Project and Business Management

You need to keep track of the details and communicate with people to make the real estate project a success. Also, you should handle the finances to guarantee proper cash flow through the project. You should identify where to make money then plan your business and tax arrangements accordingly to meet those financial objectives.

In conclusion, starting your own real estate development company isn’t an easy task. However, by teaming up with the right people for the job, you can manage any development effortlessly. By learning the skills mentioned above, your next real estate development will be successful. Take your time to learn the trade and do your research on where to maximize profits to avoid making huge losses when the building is completed.