Best way to learn RE development?

Question

What's the best way to learn RE development without actually going out and buying a piece of land then praying that you can find a good team to build a house on? I talked to a few RE investors and all of them told me the same thing, go out there buy a land and get your hands dirty.

Thanks all

Karen Margrave · Answer

@Wilson Pe First off, welcome to BP! I actually wrote a few blogs for BP several months ago on development, you can search my name and find the blogs. There's no easy way to learn the business. You don't want to jump in and get your hands dirty to learn, that can be a very costly lesson. Bill Gulley is correct, much of what you need to know has nothing at all to do with physical construction, but what happens at the Planning and Building Depts. You want to learn how to work with them in desiging your project while fitting in with what their regulations, and vision for the area, etc. You always want to make them your friend, because they are the ones with the power to make or break a project, so choose your battles wisely.

Jay Hinrichs · Answer

@Karen Margrave A ha I did it got to high light who I was responding to.. CA is really really tough even when your general plan approved. YOu still can have the EIR process which is a bear.. Vernal ponds.. toad and lizards. Indian bones, and all sorts of other little weird things most people would never think of .. And each county is different. And SO CAL is much different than N cal. And the 9 bay area counties including Monterrey are next to impossible you really need deep pockets and patients to play in those.. I did site acquisition for SFR projects from 1980 to 1991 with a medium sized syndicator ( that's what they were called before they were TIC's and before they were PPM and before they were Members of LLC's :) .. Many projects took 3 to 5 years or more. I personally own one property that I bought in 1994 in Sonoma county ( Rohnert Park) its just now coming into the city. ( they built the largest Indian Casino in CA or at least N. CA) right across the street.. I have 4 acres.. And of course like any capitalist I listed it for 3 million a few weeks ago. I paid 25k for it as an unbuildable parcel all those years ago.. But it sat behind a Home depot right off of the 101 so I thought maybe one day.. And I got brought into the city by just one lot.. So just dumb luck really.. A developer across the st. is master planning 50 acres and they brought ours in to their sphere so they are footing the bill. Looks like we are going to come in as mixed use REsi... I want to build about 35 homes there.. Hoping I can do this in 2016 and hoping the market holds.

Steve K · Answer

The development process isn't really that complicated, but as stated above it's not something you can learn without doing it first hand a few times. It's incredibly expensive and the path to getting your final approvals is filled with a lot of frustration. If you're seriously interested you can get a mini development education by picking up a small parcel and go through the process of having it re zoned. That will expose you to P&Z departments, Nimbys, attorney's fees, drainage reviews, site development bids, etc etc etc.

Bill Gulley · Answer

To build A house, pretty much, get a good GC and you can learn. Developments, streets, buildings, subdividing......work for a local developer, no book can teach the political and local government issues you will encounter which can mean seeing green or red, learn from those that do it. :)

Wilson Pe · Answer

I'm pretty new to the real estate game so I have no clue. The more I read about it the more confused I am, but that's a good thing in my opinion because I'm learning. From this thread though, I've probably concluded that RE development is extremely difficult and I should be starting somewhere on the edges of rehab.

Wilson Pe · Answer

Thanks again for the informative reply. He also recommended that I start flipping houses instead.

Wilson Pe · Answer

Thanks everyone for the reply. I managed to grab coffee with a local developer today and to be honest he was quite discouraging. He kept insisting that developing isn't the way to go now because of how hard it is to get loans and the returns can take years. Nevertheless, I was able to gain some insights on how the whole process works. I will continue looking into it. Thanks again everyone.

Wilson Pe · Answer

In other words, it's much easier to build in Oregon? I actually have an uncle that invest in portland housing, but I don't think he builds at all. He owns like 8 properties and drives up from LA from time to time.

Jay Hinrichs · Answer

J. Martin When you get off the 101 going into the casino if you go right by the Home depot you will come to a light were you make a left to go into the parking lot.. that's La bath, my parcel is just to the right of that. I have not been in the casino yet but it looks nice.

Jay Hinrichs · Answer

there are still rural areas of the US were you can just post and short plat. Maybe that's were one gains a little experience.. It takes years and really decades to learn the development bizz. And VERY VERY deep pockets . In CA we used to use Mello Roos and 15 act bonds to build the infrastructure so the developer could leverage those costs.. many of these facilities tanked in the early 90S though... In Oregon we cannot use public bond money to build infrastructure for a private development. It has to be cash form bank or internal cash.