Steps to Becoming a developer ?

Question

What would a 24yr old college student with a Drafting and Design major have to do to get into real estate development? I’m currently building my wholesaling business by building my buyers list and marketing to vacant home owners but my overall goal is to buy acres and build my own properties to flip (Eventually whole subdivisions), not so much because it would be more lucrative but because that’s something I actually set out to do and I want to hear from anyone that’s actively doing so on what it would take to get this going? Like realistic steps

Seth Holmen · Answer

I agree with @Jay Hinrichs. Find a development company to work for. I am a licensed architect working in-house with a development company. I am able to learn so much about how deals get put together and how land is developed. I don't know what your background and experiences are, but there is a lot to learn on the development side. I was in the architecture and construction world for about 8 years before joining this company. I knew a fair amount about how to get permits / working with a city/ how a building goes together and how to run a construction crew. I thought I knew more about development than I actually did. After a couple weeks of working here I realized I didn't know anything. You don't know what you don't know. I've been educating myself for the past year and I'm now just able to understand the "development language". Development is far more about deal structure and finance than it is about knowing how to draft a floor plan and frame a wall.

Ty Primers · Answer

@Jay Hinrichs thanks a lot!! I truly appreciate the advice and I hope you come across and close on your largest most profitable deal tomorrow!

Jay Hinrichs · Answer

real estate is all about learning I learn everyday and I have been taking swings at it for 44 years  LOL.. and as such I have had my resounding success's and dismal failures but as a developer you take on risk. no question about it.

Chris Pflum · Answer

@Jay Hinrichs I don't disagree at all with how you define these roles.  All of my "development" projects have been anything but shovel ready.  Usually, I'm tearing something down and building something completely different. Or re-developing an existing structure into a new use. I guess I was looking at it through that lense.

You're absolutely right that building on a developed lot is much simpler. But, if it's someone's first construction project, even at 1,100sf, there's going to be a learning curve.

Ty Primers · Answer

@Seth Holmen thank you and that’s understandable, I actually wanted to switch my major into architecture because I know it would help with not just the design stages but also being able to oversee the entire building process from permits to project management. but I felt like the time it would take to complete school, and how much student loan debt that would be, made me consider drafting as more of a faster way to enter the work field to work under someone to get the experience but The role of an Architect has always fascinated me.

@Jay Hinrichs thank you as well, I will definitely explore those 2 options but as far as borrowing capital goes, I was thinking more of starting small, building a 900-1100 sqft spec house in a market that the numbers made sense and work up from there. I like the idea of starting small and saving/reinvesting my profit until I have my own capital and won’t even have to think about the word borrow.

Jay Hinrichs · Answer

as well as how to maneuver city or county politics and land use policy.. and doing EIR's and other specific studies..

out our way

we may have to do a study for any number of things.   From Indian burial grounds too :

1. slugs of some nature.

2. Vernal ponds.

3. wetlands ( which is pretty much anywhere

4. burrowing owls  spotted owls.

5. big game migration corridors.

6. some sort of spotted lizard ( this on a project I am doing in Sonoma county CA)

and the list just goes on and on and on.. depending on jurisdiction.. each one is vastly different..

when I go into a new market looking a development deal. I will pay 5 to 10k up front to a good civil engineer land planning company for a due diligence package.. 10k up front can save you hundreds of thousands in boo boo's and I would say only 1 in 7 to 10 pass.. so right there you need 70 to 100k a year just in due diligence fees and I am just a little guy.. you can imagine what the big companies spend 100s of thousands to millions.

Jay Hinrichs · Answer

its a LOOOOONG game.. at your age I would do one of two things.. either get your license and get with a brokerage that does commercial type transactions the veteran agents will be the ones you want to learn from.

Or get a job with a building development company so you have some pedigree on your resumé'

reality is you will not get anywhere in the development business unless you have the ability to borrow 5 to 25 million dollars and attract capital investors by the millions of dollars.

Tim Johnson · Answer

Jay has great advice. I'm a custom home builder I have built sub divisons completed custom homes the entire ball of wax.   It takes time and lots of money.

I purchased pre built sub divisions in the crash for dirt cheap.  I got lucky.

I have always had the moto of to be lucky than good.  And its worked well for me..

Being a developer is tough, you will burn thru money like nothing else.  I have tired to find deals in this market and I can't make it work  I'm now focusing my attention on other sources.

Best of luck

Scott Choppin · Answer

@Ty Primers

Hi Ty: This is a great question, and as you've seen from Jay and others, the development business is deep and complex.

Take a look at this BP article that I wrote, that gives some guidance to building your career in the RED business

https://www.biggerpockets.com/blogs/9960/63926-6-w...

Also, see this thread that walks through the complete lifecycle of a multi-family development deal in CA

https://www.biggerpockets.com/forums/44/topics/427...

Happy to answer questions in this post.

~ Scott

Jay Hinrichs · Answer

yup that's all there is too it.. nothing more nothing less.. although would help to know pricing..  one GC could quote you 200k another 150k.. it up to you to know correct pricing.

Steps to Becoming a developer ?

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