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Information about Real Estate Developer

A real estate developer (American English) or property developer (British English) makes improvements of some kind to real property, thereby increasing its value. In legal form the developer may be an individual, but is more often a partnership, limited liability company or corporation. However anyone involved as a principal in such transactions is a property developer by occupation.

There are two major categories of real estate development activity: land development and building development (also known as project development).

Land developers

Land developers typically acquire natural or unimproved land (often referred to as englobo land, raw land, real property with no improvements or infrastructure) and improve it with utility connections, roads, earth grading, covenants, and entitlements. Infrastructure improvement provides a base for further development of built improvements. Covenants define the context in which future development of built improvements may take place (often in the form of deed restrictions on particular parcels: a sort of "private zoning code" limited only to those properties). Entitlements are secured legal permissions from regulatory bodies (typically in the form of permits, but sometimes in the form of re-zoning or planned unit developments). Once these improvements have been made to the raw land, it is typically subdivided and sold piecemeal at a profit to individuals or building developers.

Building developers

Building developers acquire raw land, improved land, and/or redevelopable property in order to construct building projects. The buildings are then sold entirely or in part to others, or retained as assets to produce cash flow via rents and other means. Some building developers have their own internal departments for designing and constructing buildings (more common among larger developers), while others subcontract these parts of the work to third parties (typical of small developers).

Where do developers come from?

Although there are specific educational programs which are tailored to teaching real estate finance with an emphasis on development (in the United States, typically MBA programs at university-level business schools), most real estate developers enter the business from other professional areas. Most often, persons in related fields (architecture, accounting, law, engineering, construction, planning, etc.) enter into real estate development via personal interest and opportunity, and then choose to make a career out of it if successful. An educational background in finance is typically a prerequisite for obtaining entry-level employment with an established development company, although many development company managers tend to come from architecture, construction, and related fields. Real estate development requires extensive and complex financing arrangements to be successful, as few people or organizations have the money to undertake development projects on their own (see below).

Economics

See also:


Real estate development is first and foremost a cash flow business.

Real estate is, by its nature, an expensive non-liquid asset. This means that it costs a lot of money to own it, and it can be difficult to sell. In development activity, there are also the added costs of improvements themselves (typically called "hard costs") and the fees of various and sundry consultants necessary to get the work done properly (typically called "soft costs"). Because expense is high, sale is difficult, and return on investment is delayed, real estate investment is inherently risky. A large part of the work of developers is the management of risk.

Since there are significant initial investment requirements, a majority of real estate development projects are financed with a large amount of debt leverage. While more leverage increases potential profit, it also magnifies risks and builds in a periodic negative cash flow (regular payments on the debt). Projects will generally be profitable if the upfront commitment of cash is kept to a minimum and the project can quickly start generating a positive cash flow sufficient to cover debt service.

There are almost as many ways to finance a real estate development project as there are development projects. However, most financing arrangements fall into a few broad categories: Successful real estate developers can become enormously wealthy due to the large sums of money being transacted and the value of the assets they control. However, because of the illiquidity of their assets, they are also very often cash-poor. Inability to remain cash solvent is the primary cause of business failure for real estate developers.

The process of real estate development

Although the process for development of real estate varies from project to project, the various phases can be categorized roughly as follows (in approximate chronological order):

Notable developers

See Also

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American English (AmE, AE, AmEng, USEng, en-US), also known as United States English or U.S. English, is a set of dialects of the English language used mostly in the United States.
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British English (BrE, BE, en-GB) is the broad term used to distinguish the forms of the English language used in the United Kingdom from forms used elsewhere in the Anglophone world.
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Property law
Part of the common law series
Acquisition of property
Gift  · Adverse possession  · Deed
Lost, mislaid, and abandoned property
Alienation  · Bailment  · License
Estates in land
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Corporation
Partnership
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Cooperative
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Business trust · LLC · LLLP
Delaware corporation
Nevada corporation
UK/Commonwealth:
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Business law
Business organizations
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Sole proprietorship
Corporation
Partnership
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Cooperative
USA:
Business trust · LLC · LLLP
Delaware corporation
Nevada corporation
UK/Commonwealth:
Limited company
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Business law
Business organizations
Basic forms:
Sole proprietorship
Corporation
Partnership
(General · Limited · LLP)
Cooperative
USA:
Business trust · LLC · LLLP
Delaware corporation
Nevada corporation
UK/Commonwealth:
Limited company
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landscape comprises the visible features of an area of land, including physical elements such as landforms, living elements of flora and fauna, abstract elements such as lighting and weather conditions, and human elements, for instance human activity or the built environment.
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building may refer to one of the following:
  1. Any man-made structure used or intended for supporting or sheltering any use or continuous occupancy, or
  2. An act of construction.

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Infrastructure is generally structural elements that provide the framework supporting an entire structure. The term has diverse meanings in different fields, but is perhaps most widely understood to refer to roads, airports, and utilities.
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In economics, utility is a measure of the relative satisfaction or desiredness from consumption of goods. Given this measure, one may speak meaningfully of increasing or decreasing utility, and thereby explain economic behavior in terms of attempts to increase one's utility.
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road is an identifiable route, way or path between two or more places.[1] Roads are typically smoothed, paved, or otherwise prepared to allow easy travel;[2]
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covenant, in its most general sense, is a solemn promise to do or not do something specified.

More specifically, a covenant, in contrast to a contract, is a one-way agreement whereby the covenantor is the only party bound by the promise.
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Property law
Part of the common law series
Acquisition of property
Gift  · Adverse possession  · Deed
Lost, mislaid, and abandoned property
Alienation  · Bailment  · License
Estates in land
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Zoning is a term used in urban planning for a system of land-use regulation in various parts of the world, including North America, the United Kingdom, and Australia.
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Permit may refer to:
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Zoning is a term used in urban planning for a system of land-use regulation in various parts of the world, including North America, the United Kingdom, and Australia.
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A Planned Unit Development, or PUD, is both a type of building development as well as a regulatory process. A PUD is a designed grouping of varied and compatible land uses, such as housing, recreation, commercial centers, and industrial parks, all within one contained
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asset is meant probable future economic benefits controlled by an entity as a result of past transactions or events and from which future economic benefits may be obtained.
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Cash flow is a term that refers to the amount of cash being received and spent by a business during a defined period of time, sometimes tied to a specific project. Measurement of cash flow can be used
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Renting is an agreement where a payment is made for the temporary use of a good or property owned by another person or company. The owner of the property may be referred to as the lessor and the party paying to use the property as the lessee or renter.
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A subcontractor is an individual or in many cases a business that signs a contract to perform part or all of the obligations of another's contract.

A subcontractor is hired by a general contractor (or prime contractor) to perform a specific task as part of the overall
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Property law
Part of the common law series
Acquisition of property
Gift  · Adverse possession  · Deed
Lost, mislaid, and abandoned property
Alienation  · Bailment  · License
Estates in land
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Finance studies and addresses the ways in which individuals, businesses, and organizations raise, allocate, and use monetary resources over time, taking into account the risks entailed in their projects.
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Master of Business Administration (MBA) is a master's degree in business administration, which attracts people from a wide range of academic disciplines. The MBA designation originated in the United States, emerging from the late 19th century as the country industrialized
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university is an institution of higher education and research, which grants academic degrees at all levels (bachelor, master, and doctorate) in a variety of subjects. A university provides both tertiary and quaternary education.
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Business law
Business organizations
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Sole proprietorship
Corporation
Partnership
(General · Limited · LLP)
Cooperative
USA:
Business trust · LLC · LLLP
Delaware corporation
Nevada corporation
UK/Commonwealth:
Limited company
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Architecture is the art and science of designing buildings and structures. A wider definition often includes the design of the total built environment: from the macrolevel of town planning, urban design, and landscape architecture to the microlevel of construction details and,
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