Thousands of people, investors and entrepreneurs around the
world decide to work in the real estate market, being able to make a decision
to go towards a common goal, which is to generate income with this economic branch.
Real estate investors do sometimes buy properties, but more often they develop
properties. The appeal of real estate development is the potential for higher
operating profits during ownership and larger capital gains upon sale. It’s
risky, but also rewarding when successful.
To get into real estate development, you need to understand
the processes involved, and bellow, real estate developer Jack Bistricer explains
the six general stages. Mr. Bistricer has been has been working on the development
of real estate for dozens of years, developing numerous real estate projects in
the United States, the United Kingdom, Canada, the Bahamas and Eastern Europe.
Feasibility of the project
This variable leads
the first stage of any real estate project, since before any work, purchase, or
acquisition of a property it is necessary to analyze and study the feasibility
that it may have. Taking into account the participation of real estate agents
that allow a better analysis of cost-benefit and other conveniences.
In this aspect, it will allow you to recognize the
following:
·
Market study: The analysis will give you the
data to verify what is convenient for you to do in the project, design,
structure, building and sales procedure.
·
Legal reports: Status of the property titles and
the legality that it possesses. It will allow to verify the validation through
reports and legal paperwork that the land to be acquired, or the built
department has.
·
Soil and topography study: This is extremely
important in countries, since it is necessary to verify the topography of the
terrain in reference to whether it may be affected by some movement of tectonic
plates.
·
Economic evaluations: A real estate advisor
could give the verdict on the economic possibilities of the land or the
acquisition of that property, as well as the financing prices and costs of
future sales.
Project design
In this design stage are analyzed several points that will
be of great importance for the future building. Some of the most relevant design
aspects that Jack Bistricer highlights are:
·
Construction and structure: Through
architectural plans and designs, forms of the project are proposed for its
creation.
·
Location: In this case of starting a project
from the beginning, the best placement of structures for the real estate work
is analyzed based on design, both in the aesthetic aspect and at the level of
civil engineering.
·
Road / social impact: The location and
distribution of the future property purchased and built could affect traffic or
otherwise it could get new road flows depending on the project.
The investor must
deposit all possible ideas to correctly channel the designs and engineering
studies that meet the legal, physical and strategic needs set forth in the
request.
Development
They begin to develop
those details that the construction entails, as well as the elaboration of
plans previously placed in the designs.
Once the designs are validated at the architectural level, a
budget analysis on the construction is carried out. Some key points of the development
stage for a real estate project are:
·
Soil mechanics: The behavior of the layers of
the earth's crust will be studied through the application of some laws of
physics, in order to avoid possible accidents.
·
Topographic study: In the field of engineering,
the topographic survey will be in charge of verifying the position taken
between various points on a horizontal plane, thus being able to find stability
on the ground.
·
Equipment and necessary material: It will be the
study on different materials that will be used in the construction work, such
as water and sewerage, paving and electricity, green areas and irrigation
system, among other relevant aspects.
·
Approvals to build: At this stage, legal
approvals to build are also started through a legal file outside of details.
Permission period: Pre-Sale and "Blank"
For any building or restructuring of a land, the necessary
permits are needed, in order to start carrying out the previously designed and
structured work. They are divided in two ways which will be:
Pre-sale: (Also called Private
sale) The project is raised and ready to wait for permits. This stage is when
construction and / or building authorizations are still pending.
Blank sale: This term is known
when the investor or the real estate company obtains the certificate or the
legality to build and build, but it has not yet started.
Having the permits up to date will remove more
of a headache, since they are legal procedures that the real estate company and
the investor have to protect their safety before the law.
Construction process
This is one of the most crucial and vital stages of an
entire real estate project. At a statistical level, the construction stage
absorbs at least 60% of the expenses in the project. The reduction or
elimination of errors is needed, since any slip will generate multiple expenses
in chain. The detailed aspects of the construction stage are:
Green sale: The construction stage called green sale will be
the one where the real estate project and the full building are built.
Control of works: The program structured by the construction
company is controlled, as well as the fulfillment and verification of proposed
milestones.
Preparation of contract for work: The mode of contracting is
defined and the award of the work is made.
Placement for sale
It is the last but not least step of any work or real estate
project since once it is built or about to be finished, the decision and
actions become either for the sale as well as to inhabit it.
When the project is dedicated to direct sales or you want to
include it in the rental market, it is best to have the professional advice of
a real estate broker. It will give you an analysis of both prices, feasibility
or processes for sale or rent.
A real estate advisor will manage the entire sale process
and / or type of lease that is desired. You can avoid legal problems or even
readjust the rental costs based on the annual value that the property may have
by viewing key points such as:
·
Location.
·
Accessibility.
·
Space in relation to square feet.
·
Exact value of the UF.
·
Number of bedrooms and bathrooms.
·
Value in relation to being furnished or not.
If you are thinking about investing, it is not enough just
to know the Stages of a Real Estate Project, it is also essential that you know
the benefits that you can obtain in terms of profitability according to the
stage in which you decide to acquire Real Estate investments.
Do you want to invest in properties and have doubts? Jack
Bistricer, the Chairman and Chief Executive Officer of the Talisker Club offers
you a free first consultation.All you have to do is schedule an appointment.
