It’s no secret that many commercial real estate (CRE) developers make the Forbes 400 list yearly. CRE is a lucrative industry with tons of potential for business-minded people with suitable tenacity, foresight, creativity, and perseverance.
That said, it’s not always easy getting started in CRE. You’ll have to take many steps and navigate many challenges, but if you think you can thrive as a developer, then it might be the ideal path. Today, Quality Title Group will cover all the basics of becoming a CRE developer.
First, let’s discuss precisely what commercial real estate is. US News & World Report explains that commercial property is used solely for business-related matters; instead of a living space, a commercial building or property serves as a workspace. This typically includes retail stores, multi-family rentals, industrial operations, and free land for leasing and developing.
Commercial real estate development essentially means purchasing and enhancing land to create public services and parking and establishing multi-tenant or single-tenant construction. Most developers rent commercial spaces to the highest bidder or sell them to other investors.
Profit is the primary driver of real estate development, which is why CRE developers aim to manage properties that yield massive financial returns. These professionals manage the purchase and sale of properties, revamp structures, and build new structures after securing land.
Most CRE developers play the long game and reform existing commercial properties to maximize return. You must know how to estimate the current property values and understand area demographics, growth, taxes, and other factors. Other CRE developer responsibilities include:
- Balancing books
- Scheduling meetings with potential investors, contractors, and other professionals.
- Evaluating various properties and land plots
- Identifying and starting new project ventures
- Troubleshooting a range of problems and unexpected obstacles
- Staying connected to local organizations
You don’t have to earn a college degree to become a successful CRE developer, but your path will probably be a lot easier if you have one. Consider returning to school for a bachelor’s degree in real estate, finance, business administration, or another relevant discipline. The right degree program will equip you with the accounting, finance, and management skills necessary to manage commercial properties well.
Also, consider that buying and marketing properties professionally requires you to obtain a real estate license. Each state has different requirements when getting a license, but Fit Small Business notes that the process typically includes passing an exam about construction laws, governmental rights, ownership, loans, environmental restrictions, and ethics.
Further, while it’s not required, getting a valid certificate in CRE development can do wonders for helping you forge a long-lasting career. Many colleges and professional associations provide commercial real estate development certificates.
As a student, you would undergo an intensive program and develop a deep understanding of real estate investment. You can also use such a program as you transition from earning a bachelor’s degree to starting a graduate program. Look for online platforms offering these certificates as well.
Many CRE developers are also property managers, real estate brokers, or other real estate professionals. Any experience you can acquire regarding supervising, purchasing, or marketing properties can benefit your career as a developer.
Some of these other roles may have also given you some marketing experience, which you’ll need in order to promote your new available properties. However, you can also outsource your marketing to a company to ensure great visibility and hopefully quicker sales.
As you move forward in this new role, protect your personal assets by forming a limited liability company. In addition to being easy to set up, LLCs provide liability protection, which can be very valuable especially in volatile markets.
Before making a top-notch investment in a property, you must know how to identify a good opportunity. In the beginning, consider starting with a small operation with a good margin that will help you quickly build your brand as a developer.
For example, you could convert a large single-family home into an office space or mixed-use property. Or, you could turn a spacious office building into a multi-family residential property. You could also potentially convert an apartment space into a commercial office, but you would need to check permits for the area. Start by looking into available locations and then investigate the restrictions for that area.
Finding reliable contractors is key to the success of any development project. The characteristics that make a contractor reliable include their experience and familiarity with the project, dependability in meeting deadlines, and dedication to delivering high-quality work. Conducting interviews with contractors and asking for references are great methods for assessing reliability. Doing background checks and ensuring that all certifications are up-to-date are also important considerations.
Preparing a commercial real estate property for sale or lease requires a thorough cleaning. From wiping down windows to scrubbing down walls, deep cleaning can make a major difference in the presentation of the space. It is important to use only gentle cleaners and non-toxic products which will not damage surfaces; check Cleaner Digs for some advice from the experts.
It’s also essential to remove all clutter from the area before beginning the cleaning process, as dirt and dust can easily become trapped in objects like furniture or electronics. Taking the time to do a complete and thorough clean can give any property an extra shine that will catch potential buyers’ eyes
The best CRE developers exercise superb attention to detail when evaluating properties. But it’s also essential to be extra thorough when drawing up terms and contracts for contractors and clients.
Also, you want to make it as easy as possible for clients to sign documents. You can use this PDF filler to make transactions a lot faster and easier. E-signing removes the need to print out documents, and the cloud allows you to share your PDF files securely.
If you’re looking for a fun and lucrative career, commercial real estate development might be for you. Yes, it’s a challenging path, but it can do wonders for your finances and help you build long-term wealth. Remember to consider any education, training, and experience you need to acquire. It’s also a good idea to draw up thorough contracts and allow for online signing.