WHAT IS REAL ESTATE AND PROPERTY DEVELOPMENT?

A lot of people familiar with the real estate market and industry are very well familiar with the term “real estate and property development,” and perhaps can even name a few famous estate and property developers. It would appear that the term itself is very easy to understand, a real estate and property developer simply develops or improves real estate.

 

In reality, the whole concept of real estate development is of course way more complicated than that. Unlike somebody that purchases a home to fix it up and then resell it, a high-end or large-scale real estate and property developer often deals in millions or perhaps billions of dollars in investment. It is true that a developer may be an individual, but then more likely will be a partnership, Limited Liability Company, or even a corporation.

 

There are two main categories of real estate and property development activity: land development and building development (otherwise known as project development). Property developers usually purchase land that is unimproved, meaning that it is yet to have connections, roads, any kind of grading, and so forth.

 

Real estate and property developers then step in and define the “contracts,” which are the context of any future builds and developments on the land. They also gain “entitlements,” which are the legal permissions or permits to go ahead with their development plans. Once these entitlements and contracts are in place, the development of the land can then begin, with the grading of the earth, land leveling, utility connections, and then zoning. Also, roads are planned, built, and paved, whether for the major cities or just the neighborhoods.

 

As soon as the land is properly developed, the building developers may now step in. These building developers then have buildings, whether offices, private or retail homes, planned and built on the land. The building developers and the land developers obviously need to work very closely, as the building developers plans will have to be accommodated by the land developers.  For instance, the utilities brought in for an office building are obviously different from those for a private home, as are the roads, and everything else.

 

Some of the real estate and property developers also purchase existing properties or buildings for the purpose of upgrading, rebuilding and remodeling, or otherwise improving whether for sale or to keep them as assets to produce cash flow through rents and other means.

 

What seems to you like the worst time to get into real estate and property development can, in reality, be the best time. Successful real estate and property developers today realize they can use the time to their advantage. Their real estate and property development projects will normally not be ready for rent or sale for 2 to 4 years from inception. So if they have actually bought well, they are more unlikely to be affected by the economic situation at that time of purchasing their real estate development site.

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