Contrary to how it sounds, real estate development isn’t the construction of property. The process of real estate development has more to do with purchasing, renovating, or reselling of developed or undeveloped land, having more to do with the ideas and theories behind the actual construction. Real estate developers can come from a range of backgrounds, most having something to do with real estate, architecture, or construction, but must be knowledgeable about things such as permits, zoning, and so on. As a result of the wide breadth of knowledge needed to do real estate development, there is often a team assembled to tackle this large task. However, even with a team of skilled experts, there is still a lot that can go wrong. Below are 5 of the most common mistakes in real estate development.
Paying too much for a property.
Do your research and calculations before buying any property. Often, investors make the mistake of buying a property for too much money and don’t end up turning a profit after additional expenses. Make sure you’re paying an amount that allows you to start earning.
Skipping or being lazy with paperwork.
Trying to avoid paperwork can be fatal for a real estate developer. Make sure to go through the proper channels and dot your I’s and cross your T’s. Don’t move through a deal too fast without doing all your research and making sure everything adds up.
Not planning ahead.
This speaks a little to the point made above, but make sure that before you go into a deal you are knowledgeable about the market, about the value of the property, and about how much time and money you’ll have to put into the property in order to turn a profit. Have a long-term plan and run the numbers! You won’t regret it.
Not hiring professionals.
It can be tempting to skip hiring professionals in order to theoretically save time and money. However, in the long run, hiring professionals such as a licensed home inspector can save you money in the primary deal, and give you a more realistic estimate of what you’re getting yourself into.
Believing real estate development can make you rich quick.
While real estate development is achievable for almost anyone who puts their mind to it, you won’t become rich overnight. It takes time, practice, properties, and knowledge to get the biggest return on your investments. With patience, however, success is more than possible.