ALT-1 How to become a Real Estate Developer
Everybody wants to be a developer. The thought of flying in your private airplane to check out a plot of land or popping corks from Champagne bottles at your latest grand opening, appeals to just about everyone. Doctors, dentists, bankers; everybody wants part of the action.
Many have tried but few have been successful developers. The reason may surprise you. It is not because they did not work hard or provide a good product; it is the opposition. There is a battle that begins the day you purchase your beautiful piece of land. You think it is just a pile of dirt but environmental groups look at it as something to preserve. Of course, they did not put their entire savings into the land or even care about it at all until you tried to pull a permit. They just want to save that bug, rat or bird that would be disturbed. Therefore, before you step into the ring, you need to know that you will have enemies. There will be opposition from every facet of your project and you will have to battle them alone.
If you think you are up to the battle, you will need to prepare. This business requires perseverance, hard work, long hours, and seven workday weeks. You will spend many hours dancing with city officials, dealing with bad weather and changing soil conditions. Fighting union workers and officials, dealing with unreliable sub-contractors, corrupt employees who take kickbacks is stressful and sometimes dangerous. If all that isn't bad enough, when you complete your project, you are out of business and have to start it all again so you always have the pressure of knowing you must start a new project to keep the cash flow going, especially if you have employees on payroll.
If you are still reading, you may have what it takes so I will give you some armor to help you with the battle. If you are attending college, take business, finance and architecture classes. If you are not planning to draw your own plans, you will still need to be able to read them and make changes. A huge portion of the building business is finance. Know how to set up a business plan. Be well informed in finance so you can get the right loans and know what you want or do not want in your contracts with your banks or other lenders.
Get a job in construction. You will pick up a lot just by being on site. Get in the trenches and learn this craft from the bottom up. If you work for the concrete company, you will learn how to tell if your pads are level or how to look for dirt dumped in to limit the concrete poured. Working for framers will help you learn the latest laws on measurements allowed so you will be able to catch problems on your own framing job.
When you are ready to start your first project; start small. Do some remodeling. This will not only give you the experience necessary when obtaining future loans, but you will begin to learn where to find the best sub-contractors for your larger jobs. Then as that business grows, do a speculation house.
When you are ready to move on to a large tract of homes, you will need to do some homework. Is the property visible from a freeway or busy street or will you have to spend extra advertising money? Can you build on the property? Civil engineers can help you with that and it is money well spent. Check with the city to see what your opposition will be. Look for anything that will be a roadblock. As the roadblocks add up, re-evaluate your position. It may not be feasible. There are always more pieces of land to see but recognize that there will be problems with every property. You just need to find the one that will realize the best profit.
One important last tip; never say can't. Anything can be done. It may take more money, more people to hire or whatever, but it can be done.
The building business is a roller coaster ride. One minute you are pumping water from flooded family room of model that is due to be open the following day and the next, you are celebrating the completion of your last sale. It is a long, tough road, which few survive but if you make it, the rewards are spectacular.
