Real estate is one of the most lucrative business models out there and is also available to everyone. Rather than just buying up existing properties, however, know that the real money is in building more. Say you buy a small, derelict farm in an up-and-coming area.
Redeveloping that abandoned property into a cul-de-sac, or into an apartment complex, can not only help ease the housing crisis but also help you line your pockets. Building apartments or condos instead of just houses as well means you can hold on to the property itself and sell of individual apartments. You will still own the land and the overall property, and, as a bonus,, you can manage your asset from now and into the future.
You can become a huge success as a property developer in so many ways. In order to succeed, however, you are going to need to know how to get your first project up and off the ground. Not sure where to begin? It starts here, with this guide:
Table of Contents
What Upfront Costs You’ll Need to Have Yourself
There are many financing and hard money loan options out there, but for the most part, lenders will need to know you are serious. In some cases, this will mean having a substantial down deposit on your own. In other cases, it will mean owning the land you want to build your new property on already and having money to put towards the construction costs.
Finding Your First Property
When it comes to planning a new build construction project, you have plenty of options. You can redevelop an unused site like an abandoned warehouse and convert it into modern apartments. You can start fresh with an undeveloped plot of land, or you may find a large property with a small home on top of it that would first need to be demolished before you can get started. All options can be great. It just depends on your budget, and what you can expect price-wise out of the location.
Crafting Your Project Proposal
Once you have a property in mind (or purchased), you’ll need to create a project proposal. This typically means hiring an architect to develop mock-up ideas for the space. Once you choose the one you like best, that architect or firm can start creating a fleshed-out plan and proposal that you can take investors and lenders alike.
Financing Your Project
As stated before, you’ll need to have some money to put towards your project. You won’t, however, need to cover the entire cost. Instead, you’ll want to look into real estate financing with hard money as a key option for your first time. This option works as a short-term loan that helps cover up to 90% of the construction costs and is expected to be paid back once you start selling the properties in question, even if you maintain the ownership of the land itself. You may want to consider a split model, which means selling a portion of the units and renting out the rest so that you can benefit from loan-free property ownership and a healthy rental return all at once.
Hiring and Managing Your Dream Team
From there, it’s all about finding the right people for the job. Ask around, get references, and try to find a contractor that knows what’s what, is fair, and most importantly, is trustworthy. You’ll then want to work closely with that contractor to ensure the project stays on track and within budget.