What is Real Estate Development?
Building new structures and modifying existing ones to raise the value of a piece of real estate is called real estate development. Real Estate Development is also known as property development. Building new structures, making changes to existing ones, or otherwise enhancing any piece of real estate, such as office buildings, restaurants, or retail establishments to raise its value are all examples of real estate development. Land and any temporary or permanent buildings on it are considered real estate.
Real estate development combines a variety of disciplines to create or enhance the physical environment. Land use planners, architects, engineers, builders, lawyers, consultants, salespeople and brokerage firms, financial institutions, and investment specialists are a few of the disciplines and experts the real estate development process has brought together.
Roles of a Real Estate Developer:
Developers are in charge of a project from beginning to end; they plan, design, finance, and have a team to carry it out. They use the real estate development process to create or reconstruct the built environment. The first step is finding a real estate need that is not met by the existing property. If a proposal appears feasible, more research is done to ascertain whether the development project can be carried out or not. After overcoming this obstacle, additional resources can be devoted to design, securing approvals, and building. Sales and keeping obligations to the project stakeholders are still part of the process. The developer typically sells the property to a real estate investor after the project is finished. A real estate developer could sell straight to the customer if the project is a collection of dwellings.
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Real Estate Development Process
Pre-development, building, and operation are the three primary phases of the real estate development process. Depending on the project’s aims, location, and other factors, there may be more stages for more complicated tasks. Some businesses may divide these stages into distinct phases or categorize them using different languages. Build-to-suit projects with pre-approved, lease-ready tenants are simple and less dangerous.
Pre-development is the initial phase of real estate development, during which teams perform the administrative and analytical tasks necessary to start construction. This process frequently involves extensive communication with outside parties, which makes monitoring activities even more crucial. Some of the actions that could be taken during the pre-development phase include the following:
- Finding the highest and best use for a property by researching it and its market
- Carrying out feasibility analyses
- Planning for both hard and soft costs
- Surveying people and getting environmental reports
- Purchasing the property, which includes carrying out the land purchase and due diligence procedures
- Obtaining licenses for land use and construction
The project is ready to enter the construction phase after acquiring the building permit.
Construction is the following step in the real estate development process once all necessary permissions have been granted. During this stage, development teams must closely monitor the advancement of each phase in cooperation with a building firm. Developers launch their marketing campaigns for the structure, hoping to get a pre-lease agreement.
Obtaining the certificate of occupancy, which communities issue if the building complies with all rules, is the last step in the construction process. The numerous actions necessary to attain this milestone could be tracked by development teams in a spreadsheet to avoid expensive delays or a disorderly approach. It can be hard to quickly distinguish between tasks that have been completed and those that still need to be done when this information is scattered among several platforms.
The last step in the real estate development process is to monetize the property now that the construction period is over. This may entail renting it to tenants first, then retaining it while making money for developers. Instead, it can entail renting the property to tenants before selling it to a buyer for those with various business models. In any case, the objective of the operations phase is to produce income through your chosen investment plan.
The Vella Group
Vella Group is a leading commercial real estate developer and investor based in Los Angeles, Miami and New York City. The company has unmatched global experience that has given it market-driven knowledge and skills that allow it to take on the most complex development projects.
Vella Group, LLC works firsthand from inception to completion and follows an approach that increases the predictability and effectiveness of its real estate development projects.
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