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Real Estate Development

Discussion in 'General Entrepreneur Discussion' started by Sid23, Aug 29, 2007.

  1. Sid23
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    Sid23 Bronze Contributor

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    Some of the world's great fortunes have been made in real estate development, yet I've noticed that it is a topic that is rarely discussed on this board (and also rarely on RDPD). Why is that?

    As a 29 y/o working in real estate development, I'm curious why development never seems to come up when people discuss ways to make money in real estate and wealth building.

    Is it due to the complex nature of development? The risk? I've found its harder to "get started" in, but once you do, the rewards can far surpass those of smaller scale RE investing.

    Just posting this to hopefully open a discussion...:thankyousign:
     
  2. Yankees338
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    Yankees338 Bronze Contributor

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    I believe it's because of the amount needed to start up. Of course, people claim all RE investing involves a lot of start up capital; we all know that's not true! Just gotta be creative! I do believe that somewhat rings true with development too, but not nearly as much. Eventually, I want to become a developer after I've made a good fortune in REI. I just like the idea of being able to turn a plot of "nothing" land into gold.
     
  3. bflash98
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    bflash98 New Contributor

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    I'm just learning how to develop land now. I have always want to learn how to navigate the government process and such.

    I just started working at a real estate development company. I'm hoping to have a property purchased by the end of the year to subdivide.
     
  4. MJ DeMarco
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    MJ DeMarco Raving Lunatic Staff Member Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    RE Development is Fastlane but it requires a lot of capital, contrary to what Carlton Sheets might tell you at 1am in the morning.

    The average guy in his apartment earning 40K a year at his job can't one day wake up and say "Hey, I'm gonna buy a 50 acre parcel, develop a retirement community, and then call it Del Boca Vista". Average guys are shut out.

    Barriers to entry are high. Similarly, starting an airline has high barriers to entry.
     
  5. bflash98
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    bflash98 New Contributor

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    That maybe so for the 50 acre sites but that is why I'm looking at 4 to 6 plats.
     
  6. Peter2
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    Peter2 Fastane Legend. RIP.

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    Seinfeld. :banana:
     
  7. Russ H
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    Russ H Gold Contributor Read Millionaire Fastlane Speedway Pass

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    Where I'm from, we call that a custom home builder (not a developer).

    It's still RE development, though. :)

    -Russ H.
     
  8. Sid23
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    Sid23 Bronze Contributor

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    Bflash 98, what type of development company do you work for?

    I work for a multi-family developer. We develop large scale luxury apartment buildings. We also do nonprofit developments for teachers in California. I was drawn to this type of development as opposed to the national homebuilders because I'm a big supporter of conserving the environment and while I think all new development leaves a footprint and drains resources, I believe the best thing for the environment is not custom home building and "urban sprawl" like we saw in the 70s-early 90's, rather, "new urbanism" and density. Urban sprawl and low density communities put a real strain on the environment, not to mention the economic resources of a city.
     
  9. tbsells
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    tbsells Contributor

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    :iagree:

    Barriers to entry are high in terms of cash and also in term of expertise. You must have in depth knowledge of governmental regulations, health department and building codes, environmental concerns, blah, blah, blah, its never ending. I've done it. I bought 220 acres, sold part of it off, developed 40 lots, and still own 110 acres. It was the most painful process I have ever experienced. It took 2 years of weekly meetings (fights)and $65K in engineering fees before we ever stuck a shovel in the ground. I'm lucky to still be married after the mood I was in for those 2 years. Aftrer all that B.S. you still have to build it, maintain it and sell it. I made money but worked harder for it than any other dollar I've ever made in my life. I wouldn't do it again. I guess it would be different if you were big enough to pay lawyers to do everything for you, but I wasn't. I went to the meetings with the engineer to represent myself in front of all the various boards. It was painful. When you become identified as a real estate developer people begin to look at you differently. They begin to find creative ways to screw you, hold up your project, and spend your money. After all,you're just another fat cat to them.:bgh:

    Wow, I guess I sound a little bitter. I better work on that!:)
     
  10. bflash98
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    bflash98 New Contributor

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    I work for a very large development company that buys large tracts of lands and then gets them entitled. The type of devlopment depends on the area whether it is townhomes, condos, or single family houses. Most of the communities have a mix of everything.
     
  11. Sid23
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    Sid23 Bronze Contributor

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    Tbsells, although I've haven't done any of "my own" projects, I am in the process of managing a couple of projects right now and I can relate to what you are saying. There are definitely some headaches and the process as a whole makes absolutely no sense if you ask me. There are definitely a lot of hoops to jump through. I've seen there are several places where a project can just "die" for any number of reasons, many of which a developer has no control over.

    This is a great discussion and exactly why I brought up the topic. I'm not really the Type A, overly aggressively, kill the other guy, hyper competitive (and probably a bit insecure) guy that everyone else in my office seems to be. My parents always laugh at me because they were certain I'd be a teacher or therapist (if that gives you an idea of my temperament). I was always attracted to development because I LOVE homes and architecture, figured it'd be a good way to make money to take care of my family and eventually give me the $$ and free time to be able to start lots of programs for underprivileged kids, which is a huge passion of mine. My girlfriend always jokes about how no matter the circumstance how I ALWAYS root for the "underdog."

    While I enjoy what I do, I often wonder if there is a way to do something similar without all the bullshit I put up with (which I don't enjoy). I sometimes think I'd be happier buying apartments (ala Steve O) or rehabbing homes and smaller developments, ala Russ. I guess time will tell...
     
  12. tbsells
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    tbsells Contributor

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    I've been much happier since I got that out of my life. For some reason it was something I always wanted to do. Its now been crossed off the list. I do enjoy rehabbing for rental or for sale. Its nice to be able to do what you want without having to ask permission from multiple boards. Also, I like being able to start a project, complete it and move on to the next fairly quickly. RE development is to slow for me.
     
  13. Sehcill
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    Sehcill Contributor

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    Real Estate development is insanely profitable. However, having said that there are a number of things that can and will go wrong (one of my businesses profits from warning site planners of such things). Did an environmentalist suddenly discover an eagle's nest on your site? That's a 500' setback, or roughly 18 acres you can't touch of your own land. Soils on your site creating a restricted drainage basin? That's several thousand dollars more to a licensed P.E. to do more complicated drainage calculations. Damn, apparently someone owns a spite strip (a thin strip of land seperating your tract from the right of way) and he wants half a million dollars for your property to be accessible.

    Plenty can go wrong, but then again, if you know what you're doing there is plenty of money to be made in the field. It's not uncommon for local developers to turn a $250,000 piece of land into 10 1-acre lots selling for $65,000 each, but again, much experience is necessary.

    -Jason
     
  14. nomadjanet
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    We have done a little development, one of the things I will tell you is that you need to make friends with people in the utility supply department or company in your area. Our first development we worked on, paying an engineer and going through the whole convoluted process at the city/county government level. The second parcle we worked on we got an in at the utility supplier and they shared with us a way we could bypass at least half of the process. It can be easier than you imagine to develop smaller pieces (of 12 parcles or less). The cost can be very low & it can happen quickly but it really is about who you know.
     
  15. Sid23
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    Sid23 Bronze Contributor

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    Thanks for all the comments so far. Really insightful. I did some thinking this weekend about what I REALLY WANT in my business life and here is what I came up with (these are notes, I apologize for spelling, punctuation, etc)...for those of you who commented already, does this lifestyle sound like the lifestyle of a real estate developer? I think I may need to explore other avenues of real estate...apt buildings, etc.

    WHAT DO I WANT IN MY LIFE?

    I want my business/career to be in real estate, houses, architecture, etc

    want to have the ability to make tons of money (want a great lifestyle, vacation home, high net worth - no stress over bills, etc all the time)

    want to be able to develop a system or leverage off employees time (i.e. want the biz to be making money even when I'm not there)

    want the freedom to dictate my own schedule (i.e. i never want to be the guy working 100 hours a week for someone else who tells me where I have to be and when; if i need to do something for my family, friend, etc and not get to my office till 11am someday, I want to be able to do so without answering to anyone and ideally, work still getting done)

    want the ability to take trips, start my foster kid foundation, spend as much time as possible with my family and friends, go to sporting events, alone time to read and be peaceful, etc and do everything else I want to in life as well - life is not all 100% about work for me

    want to do really well at what I do and be successful and do something that contributes positively to the world
     
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  16. Russ H
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    Russ H Gold Contributor Read Millionaire Fastlane Speedway Pass

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    SeanS-

    RE: WHAT DO I WANT IN MY LIFE?

    Excellent work. This will be your roadmap to the fastlane.

    Rep Speed + + +

    -Russ H.

    PS I'm working on a "How to make your PLAN" post-- you have a really excellent start here! :)
     
  17. andviv
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    andviv Gold Contributor Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass Summit Attendee

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    great post.
    Sehcill, yes, you are right... having my land classified as "wetlands" didn't help me... actually will end up costing me a few grands.

    In general I do agree with what has been said here... it takes a lot of resources but it also offers great opportunities to make money (if it were simple anybody would be doing it)
     
  18. Sid23
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    Sid23 Bronze Contributor

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    thanks guys. i have been thinking a lot lately about what exactly it is I want in my life, and then, on Sunday when I was watching a baseball game, it hit me.

    thanks for all the positive feedback and I look forward to your post on PLANS, Russ! :thankyousign:
     
  19. bflash98
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    bflash98 New Contributor

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    Sean,

    If you don't mind me asking what did you decide and why did you make that choice?
     
  20. Sid23
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    Sid23 Bronze Contributor

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    Bflash98,

    I didn't make a "choice" per se, but I was able (for the first time in my life) to put to paper exactly what I want in my career/business (which I outlined above).

    It may not seem like a big deal to most, but for me, to be able to put on paper EXACTLY what things I want, it has been huge. As Russ outlined, now that I know what I want, I can figure out how to get there.

    I'll keep you informed. :hurray:
     
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  21. andviv
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    andviv Gold Contributor Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass Summit Attendee

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    SeanS, yes, you just accomplished something important. You are now entering in the category of doers. rep++
     
  22. AroundTheWorld
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    AroundTheWorld Be in the Moment Speedway Pass

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    hijack, hijack

    What do you want to do here?

    Foster kids have been in my heart of late. About a year ago, we were looking at doing a foster care foundation - but as the year progressed, our plan did a little too...

    Now we are licensed foster parents - and our foundation idea has taken a different path... microcredit.

    Just curious about what you want to do specifically with foster kids.

    Oh, and.... so excited for you that you've got your focus now!!! I'm sure it will make a huge difference for you.
     
  23. AroundTheWorld
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    AroundTheWorld Be in the Moment Speedway Pass

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    Sean,

    You wrote:

    and....

    From the sounds of it, you know that...

    • You want to be in REI
    • You want to contribute positively to the world
    • You have ideas about environmentally friendly real estate practices

    If you find you niche and something that you can really feel good about the money will come. Pit questions about different areas of REI against eachother and see what your reaction is...

    What gets you more excited...

    Imagine the Front Page Headline news.... :banana:

    1. SeanS provides affordable, clean housing to low/middle income families and individuals
    2. SeanS develops new urbanism properties


    1. SeanS is teaching the world about building green
    2. SeanS has rid the city of yet another eye-sore with his latest re-hab project.
     
  24. Sid23
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    Sid23 Bronze Contributor

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    A big THANK YOU to everyone who has replied to this thread and offered suggestions, encouragement and ideas.

    :thankyousign::thankyousign::thankyousign::thankyousign:


    It's amazing what having a group of "fastlaners" in your life can do. Although nothing material has changed in my life over the past couple of days, I feel like an ENORMOUS shift in my mindset has occured. I can barely sleep, I wake up EXCITED to start the day and make things happen. I have been going 120 miles per hour at my office learning, asking questions and working hard (and smart!). I honestly believe this forumn has been the tool I needed. THANKS MJ AND ALL!!

    My next step is to put a plan in place to reach my desired results. I am eagerly awaiting Russ's thread on how to put together a plan, because frankly, I don't know how. But I'll read the post and then put the plan together. I'm flying home this weekend for a wedding so I'll have time on the plane to put my plan on paper. I'll post my plan next week for you guys to read, comment on and critique.

    I honestly feel that I CAN have the life I want. I just need to create it. Thank you all again and I hope you feel good because you have all really helped me. :hl: :hl: :hl:

    Wait till you see what happens next!

    (ATW, my mother takes in foster kids as a part-time job, so I've had a lot of experience with this population. She actually adopted one of the kids about 5 years ago so now I have a 16 year old brother. He is one of the lucky ones - he has a fund set aside to go to college. But I have seen many kids come in and out of my mom's house (usually she has no control over how long they stay) and most of them go to worse places. What I seen is a real need for "life skills" for these kids. They have very little guidance in their lives. I am not sure how I will do it yet, but I want to provide a platform for these kids to get the life skills they need. Ideally, a foundation or school or program where the kids can learn financial literacy, how to better interact with others, receive personal therapy, personal coaching, etc. These kids get thrown out of the system at age 18 and are left to fend for themselves, and they are rarely prepared to face the world. I'd like to change that.)
     
  25. Sid23
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    Sid23 Bronze Contributor

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    I'm bumping this thread.

    I've had an insight into the development field that I'd love to get some feedback on. RE Development is fastlane, that is for sure.

    But after my 3 years with my firm, I'm a little concerned. Although it is fastlane, it seems that successful developers are all very HANDS-ON and involved with each project. Granted, they don't run the project on a day-to-day basis, but they are never far removed and always know everything that is going on.

    My firm has about 7 projects in various stages and my boss is working like crazy. He is so stressed and his schedule is full of meetings, site visits, etc everyday. He mentioned the other day that he'd like to take a couple of weeks to go on vacation, but "developers never get long vacations. 2-3 days at most!"

    It seems like I'm in the process of creating a JOB for myself, not a fastlane business.

    Any thoughts?
     

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