For those that are looking for and investment opportunity that provides a great potential for high returns, investing in real estate development could be a great option. While there are plenty of advantages that come with investing in real estate developments, there are also plenty of risks. There are a variety of stages during the development cycle, each of which come with their own set of risks and challenges.
Pre-Development
The first stage of any real estate development is the pre-development phase. During this time of the real estate development cycle, a lot of work will be completed to determine the overall viability of the project. This part of the process will include making architectural plans, completing environmental assessments, receiving zoning approval, and a variety of other very important steps that will be needed before you can even break ground. While this part of the process can be time consuming, it can help to identify a lot of risks before you get started and invest too much capita.
Vertical Construction
Once you have finished all of the pre-development processes and are ready to start breaking ground, the next step would be to start the construction process. During this phase, you will have to manage all aspects of the construction phase including managing the vertical construction, ensuring that the project stay on schedule and within budget, and dealing with vendors and contractors. The timeline of this part of the project can last for well over a year depending on the scope of the project and how well it goes.
Construction Completion
As you near the end of the construction phase, there will be a variety of steps you will need to take before the property will be operational. A big part of this process will be receiving your Certificate of Occupancy, which is necessary before tenants or other occupants can take the space. To get this finalized, you will need to receive final approval from the local zoning board. This could include completing a final punch-list of open items.
Operation
Once the building is done, you will need to be able to operate it successfully. This part of the process will require daily management and maintenance to ensure the property stays in good condition. Following a proper maintenance schedule will ensure the building lasts for years to come.
It is important to be aware of this process, especially for those who are looking to break into this field for a career. Being aware of the typical responsibilities will allow you to better prepare and set yourself up for success.
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