Brosnan C. Hoban, COO of Hoban Realty.
Real estate development can be one of the most lucrative small businesses out there. A savvy businessperson who can navigate reasonable risks can build an empire that will finance a comfortable, rewarding lifestyle. Plus, who doesn’t look good in a hard hat and business clothes?
Here are three big-picture concepts to guide anyone interested in buying up some properties and building a real estate kingdom:
1. Don’t build Rome in a day.
Maybe you own a property or two. Maybe you’re earning rent, or perhaps you have flipped a house and you’re ready to dive in full-time. You’re looking to build a real estate portfolio and start earning all of your income through real estate.
A successful real estate developer uses earnings from some of their first properties to invest in others. This means having a strong foundation (literally and figuratively) on which to grow, rather than attempting to borrow too much money to get new projects off the ground.
Because successfully developing properties requires substantial research on a wide variety of laws, management of construction and management of existing properties, another benefit of taking it slow is being able to do these things properly. And this brings us to the next tip: know your market.
2. Master your market.
Your market is the area in which you wish to develop properties. You may eventually choose several cities near each other or even expand further than that. But each time you get into a new municipality, you have different regulations, different potential buyers, different competition, etc. Note that a market can also refer to the type of property, such as the “commercial real estate market,” “residential real estate market,” etc.
Before getting into the nitty-gritty of learning the demographics of a city or county, the existing availability of properties, property costs and values, it’s important to develop at least a preliminary strategy. Are you looking to develop affordable office space? Luxury apartments for young professionals? Retail space? Are you striving to be a successful developer of houses throughout an area or the trusted name in home buying? If you don’t know where you’re headed, at least in the short term, you don’t know which markets will be best for you.
Real estate learning site McKissock puts it succinctly: “Selecting a location is about committing to a niche, market and strategy as much as it is finding a good deal.” The only way to develop this sort of strategy for a niche is to learn all you can about the community and all the factors shaping the market.
3. Sharpen your communication skills.
People say that “location” is the only word for folks buying or selling real estate. But a successful real estate developer has to have basic business leadership skills, and chief among these is communication skills.
Most entrepreneurs put a lot of passion into their vision and the steps they need to take to reach their goals. All of this can be thought of as internal communication. As important as it is to have a clear vision, it’s just as important to be able to communicate it to others. Real estate development is a fundamentally collaborative enterprise — one has to partner with bureaucrats, investors, contractors, lawyers and tenants.
It’s not just about being able to speak and write clearly but also being organized enough not to let any of the people you work with fall out of the loop on any important info. In a blog post by real estate company Ferncliff, the author says that a good developer should be able to easily identify their system for communicating with the many parties mentioned above.
Keep in mind that one avenue of communication for a real estate developer is marketing and advertising. Not only do you have to develop an appealing brand that you push consistently, but you have to make sure you continually send your message out far and wide. Among all the other responsibilities a developer has, it can seem overwhelming and takes regular care. However, realize that you can and should delegate these responsibilities by hiring a social media manager and other components of a good marketing team.
These three tips encapsulate what being a successful real estate developer is all about. The road to financial success runs through using one’s brain. Learning, thinking and communicating are all the ways to excel, and what’s more rewarding than getting rich by being smart?