Most successful real estate developers will tell you that money is only one small ingredient to creating a profitable investment business. Aside from just financing real estate deals, successful developers understand the importance of building relationships and risk tolerance. Since most real estate deals are risk/reward scenarios, you need to learn how to keep your emotions out of any deal and learn to take calculated risks. Here are some tips to help get you started.
As a real estate developer, you must build relationships with contractors, bankers, attorneys and sources of equity. Building a development from scratch is not a one-person show. You will need a team of professionals with a proven ability to get past the red tape and help you create your vision. The great thing about relationship building is it typically does not cost you anything. If you have a winning project in mind, professionals with a proven track record will listen.
A Tolerance for Risk
If you are not a risk taker, then real estate development is probably not a wise career move. You have to ask yourself if you can sleep at night if one project determines the fate of your livelihood as an investor. Shrewd developers learn the secret to mitigating risk, and they also learn how to keep their emotions in check. If you think you have what it takes regarding risk tolerance, you need to constantly educate yourself on measured and calculated risks.
Real estate developers have a keen sense for problem-solving. Any investment, real estate or otherwise, comes with roadblocks that require immediate solutions. Successful developers know how to solve problems, and they know how to solve them quickly. Zoning issues, site planning, problem landowners and budgets are only a short list of difficulties you will encounter as a developer.
And Finally, Research
If you plan on spending your precious time and money on a development, you better do your research. If you find a project that really peaks your enthusiasm, do not let it prevent you from using plain old research and common sense. You must learn the market where you plan on developing, and you need to research the economic and social challenges you may face. The greatest real estate developers know how to make themselves aware of every aspect that they need to develop a successful property.