Residential Real Estate Development
Amateurs Guess; Professionals Market Research.
This is your "Numero Uno" topic. From this information all your future activity flows. Did I see your eyes glaze over at the mention of this kind of work?
Did your brain leap to your check book with the thought, "but I'm only starting Colm, I can't afford to start buying expensive reports that the professionals use."
Hold it ... let's just back up a minute. I'm not going to ask you to spend a dollar. I am however going to ask you to use some gas in your car ... and maybe some shoe leather and if you can't afford that, you're getting into the wrong game.
So researching the market sector you intend working is not only essential, it is fundamental to successful real estate development.
Professional developers use market research and market analysis as their means of reducing risk. Qualitative market research; quantitative market research and market analyses are terms and activities that you are going to become very familiar
with during your real estate development career.
Let's take your city of town as an example. Could you tell me right now where 'millionaire’s row’ is located? Could you tell me where the poorest residential values are located? Could you name the suburbs?
Excellent, you have just begun the 'market segmentation' of your city.
OK, could you tell me the location and boundaries of that part of your city where properties sell now at prices that you aim to target with your first development?
Do you know 'exactly' what price you can buy land at in that part of your city? The trick word is 'exactly,' because as professional developers, we don't guess, do we?
So what is real estate development market research, in terms you and I can use in a practical sense? We need to know the suburb where we can easily and successfully sell our unit (I call all residential living accommodation a 'unit.')
Logically that means we need to know 'for certain' the cost of land in that area; the zoning of the land we intend to acquire; the sales prices currently being achieved for the kind of unit we will develop.
I could go on about this subject and indeed I have in my residential real estate development instruction course. This brief introduction is to give you a taste of the kind of work we undertake to achieve the creation of a financially successful development.
I also teach you how to prepare schedules with figures that are meaningful. This market research tells you what to pay for land; how to arrive at sales prices for your units and it is all arrived at with no dollars flowing out of your pocket.
The driving force behind the market research methods I teach you to use is your desire to create new real estate developments. I must say that seeing your completed development
is really very special and personally satisfying.
This is the other side of the 'making money or 'becoming wealthy' from real estate development that developers don't talk about very much.
To this day I consider all the building I helped create as MINE, even though they were sold many years ago. Forget the size of my developments, because the feeling is the same irrespective of the dollar value.
Even my children (now young men and women) know every one of Dad's developments. They would sing out in chorus, if we drove past one of my developments on the way to some other location,
"That's one of Dads."
I had better not wax too lyrical on this topic or you'll think I am loosing it, but I gotta tell you, it's a great feeling knowing you have created something that will be part of your city for a long time to come.
It's like an extra bonus on top of the profit.