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A real estate developer or property developer makes improvements of some kind to real property, thereby increasing its value. In legal form the developer may be an individual, but is more often a partnership, limited liability company or corporation. However anyone involved as a principal in such transactions is a property developer by occupation. There are two major categories of real estate development activity: land development and building development (also known as project development). Land developers Land developers typically acquire natural or unimproved land and improve it with utility connections, roads, earth grading, covenants, and entitlements. Infrastructure improvement provides a base for further development of built improvements. Covenants define the context in which future development of built improvements may take place. Entitlements are secured legal permissions from regulatory. Once these improvements have been made to the raw land, it is typically subdivided and sold piecemeal at a profit to individuals or building developers. How to Be a Land Developer? - To be a land developer requires more than knowledge. It requires courage to take risks and wisdom to know when to start a project and when to wait. There's lots of expense up front. You make your money on the back end of a project.
- Develop a relationship with a good lender before you set out to develop land. You must have capital. Talk with a banker or lending institution and be specific about what you plan to do. You must establish equity lines of easily accessible money, so make sure you have good credit personally. You must establish yourself as a responsible person in your personal affairs before your lender will feel comfortable taking risks with you if you want to be a land developer.
- Find a parcel of raw land and decide its best use. You must determine whether the land is suited for residential or commercial use. Visit the county zoning office in the county where the property is located. Find out what kind of use that property is zoned for. County zoning will determine how large the lots can be and what you can do with the land.
- Have the land tested for rocks and have a perk test done to see if it can support a sewage system. Contact the local health department for a list of soil-testing companies. These are two vital issues in determining how useful a parcel of land can be. Excessive rocks can make it very difficult and add to the cost of preparing the land for building.
- Visit a local real estate office and find out the cost of local land lots. You must do a cost versus profit analysis to see how much money you can make per lot. Find out what price you can buy the parcel of land for, how much you can expect to sell individual lots for and don't forget to figure in the cost of utilities. Your budget analysis should include the cost to have utilities run, including electricity, water and sewage. Of course, you must talk with utility companies to determine those costs.
- Talk with local builders and develop relationships with some reputable ones. If you want to be a land developer, it's good to establish teamwork with a good builder you can trust.
Building developers Building developers acquire raw land, improved land, and/or redevelop able property in order to construct building projects. The buildings are then sold entirely or in part to others, or retained as assets to produce cash flow via rents and other means. Some building developers have their own internal departments for designing and constructing buildings, while others subcontract these parts of the work to third parties.
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