Are you interested in starting a real estate development company? Do you need a blueprint or sample real estate development business plan template or feasibility report?
If you answered YES, to any of the above questions, then i advice you read on because this will be the most profitable article you will ever read today!
The real estate development business is a very lucrative one, however, it is capital and management intensive. Now for those who don’t understand what a real estate development company does, i will explain in simple language. A real estate development company brings infrastructural vision into reality. They put up infrastructures, properties or buildings based on demand and make their money by either flipping, renting or leasing out the properties.
So next time you see giant shopping malls, private estates, skyscrapers, architectural monuments, etc; you should know that they are the handiwork of real estate developers. Now what do you need to setup a real estate development company?
4 Requirements for Starting a Real Estate Development Company
- Educational requirement
You do not need any special degree to set up your own real estate development company. However, if you have a degree in a related course such as in engineering or construction, it would go a long way to help you in the business.
Most real estate entrepreneurs gather necessary experience from working in real estate develop companies. They work as agents who help to promote and sell properties on behalf of the company and when they have gathered enough capital and experience to start their own business, they leave the company to set up their own real estate development company.
- Skills and Talent
You will need a set of skills to succeed as a real estate developer. For instance, you will need excellent communication skills, good interpersonal skills, analytical skills, creative ability and the ability to take initiative. In addition, you must also be ready to put in longer working hours.
- You Need Capital
Like i said earlier, starting a real estate development company is a capital intensive project, so you must be financially strong. Even if you will be raising funds from investors and banks, you will still need to put up your own money.
3 Benefits of Being a Real Estate Developer
When you invest in real estate, you invest in something tangible that you can see physically compared to other forms of investment where the only thing assuring you of your investment is some piece of paper sent to you regularly as a statement or a computer screen where you can monitor your investments. Real estate gives you the assurance that your investment is secure.
Another advantage of investing in real estate is that the value of your investment continues to appreciate, therefore it is not a regular occurrence for people to lose their real estate investment.
When you invest in real estate, you are also able to fix prices that you would like to sell or lease out your property compared to an investment like stocks where the interests you would receive from your investment would be determined by other people.
However, it is important you know that starting a real estate development company is quite challenging and requires a lot of capital. Below are some of the guidelines you may follow to start your real estate company-:
Starting a Real Estate Development Company – Sample Business Plan Template
1. Decide on the type of properties you want to develop
The real estate business is divided into several categories. There is the commercial real estate and the residential real estate. There are also real estate developers who just focus on buying lands for sale at a later date.
Each of these business categories have their own techniques and challenges, so before you start your business, you must decide on the category of real estate business you want to go into.
Yes, conducting a research is very important as it will enable you to find out all the rules guiding the business and how the market works. It is also important to carry out a research on each property or area you want to develop before you go ahead. WHY?
The reason is because an area that seems attractive today might be at risk tomorrow due to economic, political situations or increasing crime rate; so you should be able to carry out a SWOT analysis of every property before you invest in it.
Real estate development requires a lot of careful planning for you to succeed at it. So make sure you have a good business plan ready before going into the business. Here is a sample property development business plan template you can use for FREE.
Real estate development is a capital intensive business. So you must carefully map out plans to obtain the necessary funds needed to fund your business. You can get loans from banks or from other financial institution that specialize in lending out money for real estate projects.
You can also look for a partner to join you in the business so that you can pool your resources together and start the business as a partnership.
5. Familiarize yourself with zoning issues
Before you invest in any property, it is also very important that you get familiar with zoning plans for that area. Some areas are zoned for residential development only and if you go-ahead to develop a commercial property in such a place, you might end up losing your investment.
So it is important that you are familiar with zoning plans in every area you want to develop a property in. You can find out about this from the state zoning and planning agency.
It is also advisable that you find out about the future of any area you want to develop. Would there be a highway passing through that area that would require a demolition of your property? Is the area a high risk area for natural disaster? You have to find out all of this so that you can protect your investments. This could be done by hiring a surveyor to help you survey the area.
6. Hire good contractors
You must also make sure that you hire very good contractors to help you carry out your building projects excellently. Conclusively, when you have developed your building and it’s ready for sale, you must make sure you hire experienced realtors and estate agents to help you find credible tenants or buyers for your property.
Real estate development requires a lot of work, time and energy therefore, it is advisable that you hire someone with industry experience and competence to manage the property for you. The person will be in charge of maintaining the building, fixing any damages as well as all financial aspects of the business.
Pitfalls or Challenges of Investing in Real Estate Development
a. Real estate development is a capital and management intensive business.
b. One of the major challenges that real estate developers face is the inability to quickly turn their assets into cash. Buying property requires a lot of money and not so many people readily have the cash to spare. So closing a real estate deal takes longer time. This is why we invested time and resources to prepare a killer property development marketing plan.
c. Getting a grip on all the tips and tricks of the trade also takes a lot of time and experience which you would have to learn. You must know about construction, how the market works, mortgages, insurance, titles and a lot more; as having inadequate knowledge about these things may cost you your investment in the future.