What Does the Real Estate Development Process Look Like?
The real estate development process is a complex series of steps.
Typically, it starts with a concept and ends with a fully developed property ready to be purchased or leased. A real estate developer has the skills and education to identify opportunities and the connections necessary to get a project completed.
But before anything can happen, the developer needs to conduct thorough research and create a budget to ensure the project is feasible financially.
- If the project and budget are achievable, a developer meets with local government officials for a consultation. During this part of the process, the developer discusses the project and its benefits to the community.
- Next, preliminary designs are created, and all applications are submitted. In some cases, public hearings are held. This way, the community can ask questions and express concerns.
- If the project is approved, the next step involves finalizing financing and contracts. Once these steps are completed, construction can begin.
When the building is complete, the developer obtains the necessary building and occupancy permits and can then sell or lease the space.
Commercial vs. Residential Real Estate Development
A real estate developer can choose to work in commercial or residential real estate. Despite both involving the construction of a project, there are differences between the two.
For instance, commercial and industrial real estate development projects are usually substantially larger than residential projects. Commercial buildings tend to be more complex, as well. Further, they need to be built to much sturdier specifications than residential development.
The materials used in the construction phase of the projects also differ. Construction materials used in commercial applications are more expensive than residential, usually because they’re heavier duty, longer lasting and more resilient.
Because of these differences, commercial real estate development projects tend to require significantly more money than residential projects. They also run on tighter schedules and involve working with shareholders. By comparison, a residential project often involves working only with one or more homeowners.
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