Real Estate Development

Real estate development is a form of real estate investing and performed by a real estate or property developer. A property developer's goal is to make improvements to real property and thereby increasing its value. Developers are usually in the form of a company such as a corporation (but can also be an individual or partnership).

Real estate development can either be land or building development. Land developers may acquire raw land (unimproved) and add roads and/or utility connections. Once improvements are made, part of the development process is to divide the land and sell in pieces to individuals or building developers.

Building developers usually acquire improved land to construct building projects (they may also acquire raw land). Next, the developers can either sell the buildings entirely (or in part) or they may produce cash from rental payments.

A significant amount of initial investment is required to be in the real estate development field. Real estate can be an expensive non-liquid asset. This may pose risks to a developer as expenses are high and return on investment

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is delayed. Real estate developers usually finance their development activity in various ways. This may include private investors such as wealthy individuals, private debt such as bank mortgages, or public grants such as affordable housing credits.

The real estate development process may start off with market research of a particular area and project. This may further lead to a site selection where a building may be built. Construction of a project design may take several years to complete. Because of this, acquisition and creative financing may be very important. Once a structure or project is built, a respective real estate developer may either conduct sales or leasing operations.

Real estate developers usually enter the business from various professional fields. These may include architecture, engineering, and construction. Also, a financial background such as accounting may be beneficial, as individuals in real estate development require a great understanding of finance.

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