This Blog post first appeared in Forbes.
Garratt Hasenstab, Founder and CMO of The Mountain Life Companies shares his insight along with select colleagues of his from the Forbes Real Estate Council regarding some of the most essential tips that every first time real estate developer should be familiar with before entering the high-risk / high-reward business of development.
Hasenstab recently appeared on stage in Las Vegas to accept Green Builder Magazine's 2019 Home of the Year Award for his recent multifamily residential development in Breckenridge, Colorado called The Epic Homes of Breckenridge (also know as Epic On French).
Like most industries, real estate has changed over the years. If new real estate developers want to be successful, they must not only get a feel for what the current market values, they must stay aware of — and plan for — future changes in what people look for in a property.
This might seem intimidating, but with the right guidance, people getting established in the industry can start off on the right foot and establish a name for themselves. So what do you need to watch for? Below, members of Forbes Real Estate Council share some essential tips that every first time real estate developer should know.
1. Understand Discipline And Differentiation
Discipline and differentiation are key to success for developers. Discipline pertains to the numbers. They must be conservative in their projections for exit prices. The homes or condos they build, and finishes they use, can't outprice the market. The other key is differentiation. Bringing more character and story to the now popular contemporary and farmhouse styles will help them stand out. - Kofi Nartey, The Nartey Group - Compass
2. Get Your Hands On Good Data
There is so much better access to data today than ever before. Real estate developers don’t have to guess anymore. They can look at historical and real-time data, and make solid, informed decisions about the direction of the market, where specific acquisition opportunities are, and where the market is softening and could impact resale prices. - Kent Clothier, Real Estate Worldwide
3. Build Relationships First
Real estate is all about relationships and knowing people who can get access to deals at a discount, fix up portions of the house for a reasonable price should you need it, and who have experienced foreclosures and tenant evictions. Leverage the wealth in their experiences and connectivity. When I was a first-timer, these relationships were built on the ground. Today, these can be built online. - Sohin Shah, InstaLend
4. Be Creative
Partner with an owner rather than buying, or partner with a not-for-profit organization or educational/health institution who could use your expertise or proceeds from a sale. The current market is slow, so a lot of developers aren't starting new projects. But the market will turn around, hopefully just in time for your new project if you start it this quarter. - Deborah Rabbino Bhatt, Vesta New York
5. Create Your Dream Team
Development is truly a team sport. It's absolutely crucial to build an amazing team, starting with building relationships at your local planning department, local banks and local brokers to bounce ideas around and include in your plans. Next, you must seek out contractors that not only fit with your style of business but also work within a contracted budget. Always be building your dream team. - Garratt Hasenstab, The Mountain Life Companies™
6. Consider Alternative Housing Arrangements
With the legitimization of the sharing and gig economies, developers need to build residences that facilitate Accessory Dwelling Units and shared living arrangements. Homeowners want the option to monetize their home, have a better in-law living arrangement or host their college-aged son or daughter in a way that isn't available in conventional building models. - John Grafft, GRAFFT Chicago Real Estate
7. Look At Environments That Create A Good Experience
Fifteen years ago when I started in this industry, the large anchor tenants determined the success of a shopping center. Now, the success is dependent on the environment the developer and tenants create. People are no longer visiting stores because they need to buy something, rather because they are looking to do something. Dining and entertainment have become the key players. - Bethany Babcock, Foresite Commercial Real Estate
8. Know That Renters Are Savvier Than Ever
Developers focus on architecture, floor plans and amenities, but they don't always think about the resident experience from initial touch point to signed lease to living in the building. Today's renters expect a high level of service from two-day shipping to chatbots. How easy is it to make a maintenance request? How fast was it completed? Services are key to winning renters and retaining them. - Aaron Galvin, Luxury Living Chicago Realty
9. Know Your Rights Regarding Land, Air And Water
Building tech is the new perennial success factor, but few have noticed the impact that land rights and regulation have had on development. Zoning, allowed uses, ecological impact and other land use questions have had the single greatest impact on development, locally and globally. With time, we'll see more drones in the skies. Air rights will become a development question we've yet to understand. - Kristin Geenty, The Geenty Group, Realtors
10. Turn To Pre-Manufactured Materials
When I started my firm in 2013, there were tons of questions around how pre-manufactured/fabricated materials could be used for quicker build times, more predictable build costs and larger finish material options. This wasn't a complete reality at that time however, but now it is a complete reality. So much so that you can now pre-design your cabinetry and have it drop shipped for installation. - Ridaa Murad, BREAKFORM | RE
11. Implement Sustainable Development Goals
We did not have the sustainable development goals that developers do today, mostly because it was not as much of a global conversation as it is now. Sustainability, a nearly imperative aspect, along with energy efficiency have become ubiquitous in new construction, and developers both old and new face the pressure of “green” budget and competition with developers skilled in green construction. - Gary Beasley, Roofstock
12. Talk To Top Local Agents
Any real estate developer needs to talk to local top agents to gain insight. Do not assume you know. Each area and community has certain expectations and good agents will know how and where to point you! I work with flippers and smaller developers who move product quickly when they listen to where the niches are! - Nancy Kowalik, Nancy Kowalik Real Estate Group
13. Activate Common Spaces
Companies like WeWork have changed the paradigm for amenities, leveraging them for experiences. Activated spaces spark connection and infuse meaning into one’s work as a platform to support a person’s needs. This concept has exploded into every realm of real estate, particularly into multifamily. Such amenities are now viewed within the scope of a service and how it can best serve the resident. - Benjamin Pleat, Cobu (formerly known as Doorbell Communities)
14. Plan Ahead For Future Trends
Autonomous driving, for instance, might be our future. If so, there probably won't be a need for as much parking as we're used to. So, if you need to build a building today, build it for today with a plan for the future. Some developers are building parking garages that can easily be converted to more office space. Developers didn't think that way before, but the time is now to plan ahead. - Vinny DiMeglio, Jones Lang LaSalle
