Real estate development is a capital-intensive and multi-disciplinary endeavour. It requires multiple players such as architects, site planners, engineers, general contractors and a host of other professionals performing different roles to ensure that the building idea drawn on paper is reproduced as real property.
Are you curious about the overall processes involved in developing a property? Here is a step-by-step exposition on the lifecycle of a real estate project. A Real Estate project may be any of the following: erecting a new structure or transforming an already existing property.
There are three phases in real estate development.
- The Pre-Development Phase
- The Construction Phase
- The Post-Development Phase
The Pre-Development Phase
This first stage of the real estate development process begins with finding the perfect site, assessing it, and defining how to finance the project. Usually, before any real property is built, there is a site selection process to determine the right place for the proposed development. The site chosen would largely depend on the scale of the project and the developmental potential of the site.
Aside from finding the ideal place to build on, research on the legal requirements, risks and advantages of building on the site happens in this stage. This information is necessary because it helps real estate developers avoid violations of stipulated laws and regulations.
Creating the site plan, getting the estimated future cost for the project and identifying the anticipated benefits of the proposed structure to be built happen at this stage.
Basically, the pre-development stage is time to do the due diligence through comprehensive research- discovering everything about the undeveloped property and planning every move in preparation for the construction stage.
The construction phase is where the building begins to take form. This is why it is essential to have clarity of purpose and plan out all of your moves in the pre-development phase. At this stage, the construction experts spearhead the building project and ensure a smooth operation.
The scope of work and the professionals needed to achieve your quality expectations are identified in this stage. Once the construction project begins, it is easier to determine the schedule for completion.
The construction experts have the sole duty of ensuring that the grade requirement in site layout and the holistic design are met, and appropriate construction materials are procured.
From framing to roofing, HVAC, interior works, onsite and offsite work, the construction experts work to create a functional and cost-effective design with aesthetic appeal.
In this stage, all stipulated regulations are strictly adhered to so the building is safe and sturdy as it should be. After the construction process, the built property is ready to be turned over to tenants on lease or sold out to potential buyers.
The post-development phase is where real estate developers decide on what happens to the finished building. Do they it on lease and manage it, or do they want to sell it?
Real estate projects financed by real estate investors are often placed on lease to generate income. The income generated consistently is then used to fulfil the expected investment return.
But real estate developers can also decide to sell the finished property to turn in a quick profit. This way, they can move onto the next project sooner.
To recap, the real estate development process is a complex one. It involves the input of several professionals to complete the process – the process of translating building ideas to live properties.
Understanding the real estate development process makes you a better real estate investor. When you learn more about the field of investment you have ventured into, it gives you an upper hand in decision-making.
Also, you are more prepared to undertake an upcoming project because you know exactly how it works and what to expect.
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