Resources for Beginners in Real Estate Development

Resources for Beginners in Real Estate Development

Real estate development is a popular career and past time for many entrepreneurs. Although the financial success is a tempting reason to enter the real estate market, developing land or office space requires a special skill set. Beginners have many questions about financing, permitting and regulations, and other aspects of real estate development. Luckily, there are tons of resources that provide sound advice and answer many common questions. Listed below are a few of the time tested favorites.

Real Estate Development: Principles and Process

This text written by Mike E. Miles provides a thorough overview of real estate development. Based on an academic perspective, this resource provides a general understanding of real estate development basics.

The Real Estate Game: The Intelligent Guide to Decision-Making

In this comprehensive resource guide, William J. Poorvu draws from his vast array of life experiences. Poorvu served as an educator at the Harvard School of Business for nearly three decades and has been in property management and development for more than four decades.

Property Development for Beginners: A Beginners Guide to Property Development

In this well written collection, author Steve Chandler offers a realistic look at the benefits and challenges of choosing a career in real estate. He provides pointers and additional resources for serious investors.

Raising Private Capital: Building Your Real Estate Empire Using Other People’s Money

Matt Faircloth is an accomplished real estate investor and published this resource outlining some of his most successful tactics. This title is geared toward current investors and serious beginners. Faircloth primarily focuses on fundraising and other financial principles of real estate development.

Professional Real Estate Development: The ULI Guide to the Business

In this textbook style resource, authors Richard Peiser and David Hamilton provide information vetted by the Urban Land Institute. Through a variety of case studies and valuable insight, this resource covers the basics of residential and multifamily properties as well as office space, retail, and industrial real estate development opportunities.

Making it in Real Estate: Starting Out as a Developer

John McNellis provides a true nuts and bolts overview for beginners in his latest educational title. He helps readers turn their ideas into reality by providing his expertise on topics such as leadership, turning down an opportunity, and taking risks.

How Can Real Estate Development Recover in 2022?

How Can Real Estate Development Recover in 2022?

The global pandemic changed the business world for nearly every industry. Many of the changes were unavoidable and unprofitable, but things look promising for 2022. Many experts are optimistic regarding commercial real estate development. Concerns exist, and all investors need to understand the possible challenges. To succeed, anyone involved in real estate development will need to remain flexible and adapt to the market.

 

Potential Market Complications

 

Real estate professionals do not expect any complications with the same negative impact seen in 2020 and 2021. COVID variants could continue to appear for many years. Health experts, however, do not believe any will cause the type of lockdowns previously experienced. Government agencies monitoring inflation risks will adjust as needed to keep the stock market as happy as possible. Price increases may influence some future development, but the improvements in the marketplace will prevent rises in oil prices and material costs from harming growth.

 

Expected Industry Boosts

 

Repairs to supply chain problems will ensure that products flow freely again. These repairs will prevent the past shortages of building materials and retail inventory that plagued all consumers over the last couple of years. An additional boost for real estate development is optimism. In 2021, new business license applications were up, and experts predict that in 2022 there could be an increase in applications of 28 percent over 2020.

 

Increases in Demand

 

The real estate development market could see a combined rush from different investors. Many businesses that thrived before the pandemic had to put their plans on hold, but 2022 offers the opportunity to return to previous expansions. Another possible effect is the endeavors of new entrepreneurs. Many business-minded individuals chose to find a new path after their jobs became obsolete during lockdowns. The options could make many real estate markets busy as buyers vie for all property types to meet their needs.

 

The last two years have been difficult for everyone. Optimism for what possibilities 2022 may hold has already boosted real estate value in many regions of the United States. Development has continued slowly and steadily over the last few months and is likely to increase substantially as the year unfolds.

How Does Winter Impact Real Estate?

How Does Winter Impact Real Estate?

Whether you’re an investor or a buyer/seller, knowing what moves the real estate market is key to maximizing gains and getting the best deal possible. One of the key factors that impact real estate value is seasonal changes. Buying or selling propery in wintertime can be a difference of night and day when trying to sell the same unit during summertime. Here are three ways on how cooler weather can affect the real estate market.

 

Slower Business

 

As with any financial market, the real estate market is dictated by supply and demand. There are seasons of the year wherein buyers outnumber sellers, during which time it becomes more challenging to purchase a property within your desired budget due to the bigger amount of bids coming in. Summer is typically the busiest season of the year, with people buying more aggressively than any other time of the year. Come wintertime, the demand subsides and so does the market prices. This makes it a great time to buy real estate but not so much to sell one.

 

Different Staging Process

 

Staging a home that you want to sell during wintertime will involve slightly different design elements than when you’re staging a home during summertime. For starters, you’ll want to crank the furnace or boiler up to keep the temperature indoors nice and cozy for home buyers who come in to check the property. Boosting curb appeal during wintertime can also be more challenging since there is less natural light in the day and less vibrant colors surrounding your property. You can boost your property’s curb appeal by adding tall grass and purple-colored cabbage plants for some background contrast.

 

Lower Realtor Costs

 

With a lower demand in housing, you have more wiggle room both as a buyer and a seller. Realtor costs, for instance, can be negotiated to reflect the seasonal freeze in demand for their services. Contractors may also offer lower pricing for their services to get more business in a time when demand for work is seasonally lower.

 

Regardless if you’re a buyer or a seller, patience is perhaps the most important value to succeed, especially in a market like real estate where seasonal changes impact valuation. Simply being patient and timing your purchase or sale can net you savings or profits of 5-10 percent easily.

Protecting your commercial real estate project in extreme weather

Protecting your commercial real estate project in extreme weather

Climate change on earth is very real as temperatures continue to rise higher to create extreme weather conditions. Therefore, it is necessary for real estate owners to ensure they have the right measures set in place to avoid any negative impact from upcoming extreme weather situations. Workers in the insurance industry are keeping a close watch on the changes in weather because certain weather conditions can increase the premiums on insurance plans or change the rules in different regions. There are some risks of climate change that cannot be insured, and in those cases the reinsurer’s approach is very important to primary insurers. Reinsurers will raise the rates for primary insurers as severe weather creates more loss, and then the primary insurers will raise the costs for those who buy insurance like tenants and property owners.

 

Climate change and severe weather has made it so that real estate investors must really understand the importance of surviving the risks of bad weather by creating a strategy that will decrease losses. Some companies have chosen holistic methods to protect themselves such as climate change related shareholder activism and the possibility of huge lawsuits. There could be less renters in demand for several reasons related to weather including bad storms and floods, heatwaves, wildfires, drought, and water stress. It is also possible for damage to nearby buildings and homes to make it so that tenants cannot access their own building and when this happens, real estate owners must deal with the risk of climate change and severe weather affecting their income even when their own building is protected from extreme weather issues.

 

Since climate change can pose such huge risks to financial systems all over the world the Task Force on Climate-related Financial Disclosures (TCFD) was created by the Financial Stability Board. The TCFD makes sure climate-related financial information and risks are reported faster and with more information. These bad weather risks are just like any other financial risk and can be disclosed in a company’s profit and loss account. As long as real estate owners and managers understand that they cannot ignore climate risk and instead decide to assess the risk and opportunities with climate data, everyone in the real estate business will be able to build resilience from severe weather troubles and create much better outcomes.

                                                    

 

                               

Understanding Closing Costs on a Property

Understanding Closing Costs on a Property

Closing costs comprise a large chunk of what you might have to pay for as a borrower and property buyer. Failing to factor closing costs into your budget can have a detrimental impact towards your ability to keep up with your mortgage payments. Here is everything you need to know about closing costs.

 

What Is It?

 

Closing costs, as the name implies, refer to the costs that a borrower must pay when he/she finalizes the purchase of a property, be it residential or commercial. While these costs can add up to a considerable sum, both parties involved in the transaction shoulder a portion of the closing costs.

 

What Fees are Involved?

 

The seller pays a number of the fees that make up the closing costs of a property he/she is trying to sell. These include the real estate broker’s commissions, which can easily reach up to six percent of the property’s purchase price. Other expenses included in the closing costs are your application fees, legal representative’s fees, and any discount points that are useable. Taxes are also tacked into a property’s closing costs, which can sum up to about 15 percent of the agreed-upon purchase price.

 

What is a Title Search?

 

Another common cost category you’ll encounter when trying to close on a property is title search. A third-party company performs a comprehensive background check of the property to make sure there are no undisclosed heirs and unpaid claims on the property being sold. Home buyers are also expected to pay title insurance fees, which basically covers the policy holder of any costs associated with ownership issues.

 

How Do You Minimize Closing Costs?

 

One way to minimize your closing costs is to pay cash for the property. You can reduce your total costs by as much as 1 percent of the property’s purchase price. You also effectively eliminate fees, such as loan origination and appraisal charges. You can also cut your closing costs, as a buyer, by foregoing the services of a realtor. Instead, deal directly with the owner. While this means more due diligence required on your part in order to make sure the transaction is completed properly, it helps you avoid the hefty commissions paid out to a realtor.

 

Make sure you fully understand your exact closing costs before you even sign any paperwork or give a confirmation to the other party involved. You can find a number of free closing cost calculators online that can help you determine your estimates.

 

Tips on Shifting to a Real Estate Career

Tips on Shifting to a Real Estate Career

The level of success you put into your career in real estate will determine the amount of success you enjoy. While this is basically true of any career path, there’s a more direct link between effort and success when you rely on commissions for your income. You should take the time to prepare for the other changes a career in real estate will bring into your life.

 

Plan Your Career

Once you undergo the necessary education to pass your licensing exam, you should take the time to create a specific path for your career in real estate. This will involve setting short-term goals for yourself. Each short-term goal should take you one step closer to achieving your long-term objectives. Your strategy should include a marketing plan and a system for covering your expenses. Keep in mind that you’ll essentially be an entrepreneur, so you should prepare for all of the expenses and responsibilities that any new entrepreneur faces.

 

Plan For a Period of Limited Income

If you can keep an hourly job as you get started as a real estate agent, you should consider the benefits of staying employed. Otherwise, you should have a modest nest egg upon which you can draw to support yourself as you launch your new career. Just as a new business struggles to turn a profit in the first three years of operation, new real estate agents don’t usually earn a decent income until they have established themselves in their local communities.

 

Choose a Niche

It will also help you find greater success as a real estate agent if you can focus your efforts into a specific niche. For example, you might have an interest in offices and business parks. By focusing your career on those specific types of properties, you can create a marketing strategy that targets entrepreneurs and small business owners. You’ll save time, money, and energy when you’re not spreading your efforts too thin.

 

Keep in mind that you will be your own boss even when you work for a brokerage firm. This means you’ll have to find ways to stay motivated and work more efficiently. Developing a strategy that you can follow on a daily basis will help you sell more properties. In addition to working harder, you should also look for ways to be more effective as you serve your clients.

 

Likely Issues to Face Real Estate Projects

Likely Issues to Face Real Estate Projects

Every city, state and country has residential and commercial real estate development plans that are currently underway. In addition, every society has social problems that increase the difficulty of work for real estate developers. The following issues are likely to affect the success of real estate projects now and in the future.

 

Untimely Delays

 

Delays in real estate projects can last for years longer than expected. These delays may be the result of social problems, such as decreased funding for residential projects or reduced needs to relocate in the case of remote workers. Untimely delays are some of the worst problems to affect real estate developers and their clients.

 

Immigration

 

Increased immigration results in increased demand for affordable, multifamily housing. In addition, massive surges in immigration may happen very quickly and result in overcrowding in certain cities. This puts increased pressures on urban, suburban and rural communities to accommodate these changes quickly.

 

Climate Change

 

Climate change is one factor that fuels many people to immigrate from one city or country to another. They may have experienced a natural disaster, such as a hurricane or flood, that destroyed their property, forcing them to relocate.

 

Global warming has increased the number of hurricanes that occur worldwide. The result is increased flooding that has made it more difficult to plan and develop projects.

 

Technology

 

Technology is a growing trend in the real estate industry. More property developers are willing to adopt new, innovative building technologies, such as touch-free electronic devices and motion detection lighting. The costs of adopting technology continues to be expensive and will increase as the features become more complicated.

 

Infrastructure

 

Infrastructure underinvestment continues to increase the risks of constructing buildings and increase delays in finishing projects on time. The American Society of Civil Engineers (ASCE) predicts that ongoing underinvestment in infrastructure will add to economic burdens that negatively affect working professionals, families and businesses.

 

In the complex, modern world, no real estate developer works without facing a host of problems. From worsened climate change to reduced economic funding, developers are more likely to delay or cancel projects than they were several decades ago. They must be prepared for a problem to occur during any step of the process, whether it’s creating a valid contract or scouting for viable land to purchase.

 

                                                    

 

                         

How to Qualify for a Home Loan

How to Qualify for a Home Loan

Buying a home is a big goal many families have. However, a purchase that can easily reach six figures limits the ability of most people to pay cash. That’s why it’s important to figure out how to qualify for a home loan.

Track Income

Gone are the days in which anyone could walk off the street and leave with a “liar loan.” Instead, it’s necessary to provide proof of income before qualifying for a home mortgage. Banks want to know that a borrower is likely to have the means to pay off a loan. Therefore, saving few pay stubs and having access to previous tax returns is a necessity. These documents will help lenders assess the relative ability of prospective borrowers.

Build A Good Credit Record

Banks will pull a borrower’s credit report before giving her a budget for buying a new home. This will have a list of outstanding debts, and it might also show some debts that are paid in full. Banks want to see that prospective borrowers have a relatively low debt-to-income ratio. Those who have high levels of debt before a mortgage will likely be riskier borrowers for the bank. Paying debts by the due date is the most important component of building a good credit record. It’s important to remember that those with higher credit scores will secure loans with lower interest rates.

Save Money

There are some government-backed lending programs that allow borrowers to get into a home for no money down. However, these are not always the best option. They can come with mortgage insurance that’s intended to protect the lender while doing nothing other than raise the cost of borrowing for the borrower. Those who are able to put at least 20% toward the purchase of a new home will avoid mortgage insurance, and this will cut down on their monthly payment. Additionally, those who have a good down payment will have equity from the beginning. A borrower who puts no money down will have no equity to protect them from owing more than the value of their residence if the market drops.

A mortgage is a requirement for many families to purchase a home. Shopping around can be a good idea that can sometimes provide lower interest rates. However, the most important steps to take toward getting a mortgage are building a nice income and down payment while also working to achieve a high credit score. Those who pay attention to these goals will likely qualify for a mortgage with a relatively good rate.

                                                    

 

                                

What to Ask Your Real Estate Agent When Buying Your First Home

What to Ask Your Real Estate Agent When Buying Your First Home

With an ever increasing number of online tools available for home buyers, it can be easier than ever to buy a home without the guidance of a seasoned real estate agent. That still doesn’t mean it’s a good idea, however. This is particularly true for first-time buyers. There are just so many variables to buying a new home and so much that a seasoned real estate agent brings to the table. Here are three questions first-time home buyers should ask their agent.

  1. Where should I look?

When buyers begin to look at homes, they generally think about where they want to live in terms of commute times, walkability or maybe school districts. What they don’t always think about are things like tax rates, traffic, parking or zoning. Sometimes living on the north or the south side of a certain street can make a huge difference or living just a few blocks east or west may save you thousands of dollars or millions of headaches.

  1. What additional expenses can I expect?

It is a common misconception that owning a home is much cheaper than renting. The truth is, when you rent, your landlord is responsible for any number of expenses that suddenly become yours once you own your own home. These can include things like HOA fees, sewer, water and trash collection, property taxes, mortgage insurance and an entire plethora of upkeep and maintenance expenses. The big difference between owning and renting, however, is that all that money you spend on a home is building equity, while rent never will. By asking your real estate agent what additional expenses you can expect, you will have a much better idea of what you can realistically afford to spend on a mortgage.

  1. Would you buy this home?

Real estate agents have to walk a thin line between keeping their clients happy in the short term and making sure they will be happy with their purchase in the long run. Sometimes clients fall in love with a home that an agent can see a million problems with, but if that’s the home the clients decide they want, that’s the home the agent will help them get. Before you get too fixated on a home, ask your agent if they would buy it and why or why not.

 

How to Find a Luxury Property in your Area

How to Find a Luxury Property in your Area

If you want to start investing in real estate, you’ll probably start with homes in the low to moderate price ranges. This will help you build up some capital, but you won’t make a good profit until you start dealing in luxury housing. When you’re ready, it’s important to know where to find high-end homes that will earn you a better profit. While you can search listings, there are a few more efficient strategies for finding your next investment property.

Socialize With the Wealthy

In any career path, your advancement will depend as much on who you know as it does on your specific expertise. This is equally true when it comes to investing in luxury real estate. You can meet wealthy individuals by joining health spas, country clubs, and other places where the social elite are more likely to congregate. Developing friendships and acquaintances with the wealthy will give you the inside track on luxury real estate. You’ll be among the first to find out who will be selling their properties in the near future.

Provide a Service

The wealthy have unique problems that affect their finances, and they’re always looking for that special professional who can help them alleviate their concerns. Whether you prepare taxes, sell insurance, or have experience in the lending industry, you have skills that the wealthy need. By using those skills specifically to help the wealthy, you can create a niche career for yourself. Additionally, you’ll position yourself to learn about luxury home sales before they hit the market.

Host Seminars to the Wealthy

You can solve a problem for several wealthy individuals at once by hosting a seminar. The event should provide comfortable seating, good quality snacks, and a secluded environment where they can focus on your lecture. Instead of giving specifics for solving the problem, your seminar should focus more on why you’re qualified to solve the problem for them. You can give some generalized information, but you want to ensure they will still need to hire you by the end of the lecture.

You can also work with a real estate agent who deals primarily with luxury real estate. They can help you find high-end homes that are new to the market. An agent can also keep you informed about open houses to help you explore more properties in the market. This type of professional assistance can make your search easier and shorter.