How to Develop Real Estate




Real estate development is a complicated capital-intensive process.

There's a lot you need to know and do before you put a property under contract or close on a property to develop:


Determine Finances

First you need to do a quick feasibility exercise to determine if the project will work financially.

Start with the potential gross income to determine the value. Then, work backwards subtracting development costs, building costs, commissions, and interest expense.


Check with City and County

If the project looks feasible from a financial standpoint, the next step is to check with the city or county planning and zoning department. This is to get an idea if your concept will work, if you can build what you would like to build and the requirements for all approvals including:

  • Site Plan
  • Building Permits
  • Proffers
  • Water/Sewer Tap Fees
  • Bonding Requirements
  • Inspections
  • Setbacks
  • Lot Coverages
  • Parking Requirements
  • Height Restrictions
  • C/O Process
  • Time Frame for All Approvals



Check with Utility Companies

You also need to check with the utility companies to learn availability and cost estimates from them for:

  • Water
  • Sewer
  • Power
  • Gas
  • Cable
  • Installation and Connection Requirements
  • Tap Fees
  • Hookup Charges
  • Transformer Location and Relocation
  • Power line and Power Pole Relocation Issues


Check if you must install any:

  • Manholes
  • Fire Hydrants
  • Curb
  • Gutter
  • Sidewalks
  • Street Signs
  • Street Lighting
  • Specific Street Design
  • Access requirements


Check DOT requirements for access, stop lights and permits, traffic studies, DWQ requirements for permits, permit fees and time frames.

Once you understand what you can build and what is required with permits and infrastructure, talk to civil engineers, architects and commercial general contractors that do the type of projects and build the type of buildings you want to build. This is so you can get an idea of costs, time frame, and requirements.


Closing Thoughts

This is a brief and broad overview of how the development process works what's required before you get too far down the road or purchase a property.


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