Starting a property development company is a quick route to achieve great wealth and respect. Becoming a developer is about finding and completing your first successful project. But how to find and build your first project without experience and without being first rich?
Understand “the highest and best use”
In the first place, it is necessary to understand the concept of “higher and better use”. The highest and best use for a property is the use that generates the greatest amount of income for the owner, while it is physically and legally possible. As a developer, you are looking for properties that are not at their best and best use. Bringing them there is how you will make your money.
Select and study your target area:
Begin by selecting an area to focus on. For beginner developers, this is usually the area where they live. However, if you live in an area where real estate values ​​are not going to rise, you may need to choose somewhere more dynamic. The important thing is to concentrate. His knowledge of a particular area is one of the main advantages he has as a beginner developer. You can not develop this experience if you divide your time.
Once you have selected your area, know the location of the companies, schools, parks and houses there. Notice how the properties fit and look for the properties that “stand out”. An example would be a small house on a large lot on a street with condo buildings – there is probably an opportunity to replace the house with a condo project.
Get control of your destination property:
Once you have found a property that “stands out”, you need to control it. Fortunately, you do not need to have a lot of money to control the property. Here is what you should do: Find a real estate agent in your area. Ask for their help in writing an offer for the property. Be sure to put in the contract a warranty period of at least 60 days. Once you have the owner’s signature on the sales contract, you control the deal.
Create your team:
You need expert help to develop your project. Luckily for you, many of them are willing to work for free in the beginning. The most important member of the team is its architect. To find one, ask the real estate agents for recommendations, then talk to anyone they recommend. Explain what you are trying to build, ask if it is possible and then listen carefully. The architects will be willing to tell you if the project is possible and what steps you need to take to make this happen. Select the architect you feel comfortable with and ask him or her to help you assemble financial projections for the project. These include the costs of buying the land, obtaining the necessary permits and plans, paying a contractor,
Find the money:
With property under control, an architect on the team, and solid financial projections, you are ready to raise money. Most of the money you need will be loans for the construction of the banks. However, you will also need cash, sometimes called capital. This may come from you or from investors. It will have to contribute a patrimony that rises between 10 and 20% of the cost of the project to convince the banks to lend the rest. It is very important that you speak with a good lawyer before requesting anyone to invest in your project. Your lawyer will explain the relevant laws and create the legal documents you need. When talking with investors and banks, keep this in mind: It is your job to project an aura of trust. Your ability to sell your project to people with the money will determine if your project will happen or not. Talking about the real estate industry you might have heard about A Toronto based real estate developer from has broken ground, he is working on The One which will be the tallest residential and retail tower in Canada, slated to be 308 meters tall and 85 stories high.
