Property development is one of the most involved fields in the real estate industry. Requiring agility, good judgment, and an unwavering constitution, the process is a high-risk, high-reward outlet for developers all over the world. This process largely begins with building an airtight development plan, a unique blueprint that details the process, components, and expectations required for a real estate project.
Unfortunately, this is easier said than done.
Real estate development is far less straightforward in reality than it is on paper. Contrary to popular belief, the process is anything but a straight line — unclear timelines, regulatory setbacks, and multiple iterations are required to complete a successful project. Launching a prosperous career requires a deep understanding of this reflexive process, especially for industry newcomers.
“Successful real estate developers need to reframe their mindset from goal-oriented to systems-oriented,” says Joshua Freed, a seasoned real estate developer and the CEO of Equity Capital Inc. “It’s better to embrace development as a process or a journey instead of a one-and-done goalpost, which will ultimately temper your expectations, and otherwise help you reap the most amount of success from the industry as a whole.”
Freed explains that his sentiment is not unique, but still critical for success. Today, thousands of knowledgeable developers in the real estate industry urge beginners to take a reflexive and adaptive approach to development, especially as they navigate the uncertain waters of their first few projects. With decades of experience helping new developers get their feet wet, Freed was kind enough to share some insights into what the property development field looks like at all stages of an upcoming project.
Traditional models of property development utilize a linear matrix to denote the completion of one stage and the start of another. However, experts like Freed suggest that real estate development is far more complex and iterative, similar to bicycle gears that require one mechanical component to turn another.
When it comes to successful property development projects, there are three major touchpoints that require their own set of processes: planning, preparation, and project construction.
Planning And Strategy
Every good development project begins with a good idea. This requires you to expound upon your property idea, determine the extent of your abilities, and consider the potential value-add that your project may create. To do this, you must shoulder three continuous supporting processes that feed into the strategic planning phase:
- The ambition: Nailing down exactly what you want from your next development project.
- The acquisition: Determining the type of property you should acquire to meet this goal.
- The feasibility: Evaluating the practicality of your project with SMART goals (specific, measurable, attainable, relevant, timely).
If your idea shows promise as a potential real estate project, you can decide to move into the next development phase: preparation.
Preparation And Regulation
You have already weighed the feasibility of your real estate development project. However, this phase of the process requires you to take things a step further with further analysis, marketplace negotiation, and regulatory compliance.
The analysis and regulation phase requires you to think critically about your project and its ability to pass through multiple stages of review. For example, you will need to
- Establish contact with authorities.
- Obtain licenses and certifications with public offices.
- Negotiate the deal with your partner, stakeholders, and other board members.
- Navigate regulations with lawyers, contractors, and members of your development team.
Preparation is perhaps the most complex phase in the development process. Developers must be aware that few projects are completed entirely to plan, and should remain both adaptable and adjustable to meet changing circumstances. Continue to perform market analysis throughout this process, and complete regular estimates of your property’s value to see how it may affect your final outcome.
Management And Construction
The construction of your real estate project is the hardest and most laborious aspect of property development. Even before breaking ground, it will be imperative to finalize a design, determine your management body, and hire the right people to get the job done well.
Keep in mind that this final stage is not linear or definitive. The management and improvement of a property may be ongoing for several years, if not for the entire lifetime of your ownership. Keep this in mind as you navigate the initial two stages of your development timeline.
Bringing It All Together
Property development is anything but a linear process. However, armed with the right tools and expectations, the procedure required doesn’t have to be impossible or unnavigable. As long as developers are willing to be agile and flexible, says developer Josh Freed, the creation of multiple successful properties is not only possible but inevitable.
“Getting started with property development doesn’t have to be rough waters,” he says. “Hold on, but don’t cling to the process as it stands, and be willing to do some improv work on your own; you will be well set on your first journey into the unknown.”