Before You Develop Your Property for the First Time, Read This.

If you’ve never developed a property before, it’s hard to appreciate what a real estate developer actually does. Most people think a developer is the person who builds the building, but that’s really the contractor’s job. The developer is the person who puts all the pieces together, orchestrates them, and makes the thousands of decisions that determine whether a project succeeds or fails.

I didn’t know that when I got into real estate over thirty years ago. In fact, I didn’t even know what a developer was. I started in construction because I liked building things and needed to make a living. Then I bought my first very small investment property with a partner. Looking back, I realize I was doing development long before I ever called myself a developer.

That first project was small, but the fundamentals were exactly the same as they are today on projects worth tens of millions of dollars. We found a property, studied the market, ran the numbers, and put together a simple business plan on the back of an envelope. We secured financing, hired an architect and engineer, redesigned the building, worked with contractors, managed the construction, coordinated attorneys, selected finishes, hired a real estate broker, and eventually sold the property for a profit.

At the time, I thought I was just renovating a building. What I was really doing was development, just on a much smaller scale.

The funny thing is, the process really hasn’t changed all that much. Today our projects are much larger, but we’re still solving the same problems, only on a bigger and more complex scale. We’re trying to figure out what should be built, whether the numbers work, how to finance it, who should be on the team, how to get approvals, how to work with communities and local politics, how to stay on budget, and ultimately how to deliver something the market actually wants.

That’s really what a developer does. I like to think of a developer as the CEO of a real estate project. The architect designs the building, and the engineer makes sure it works. An attorney handles the legal side. A lender provides the financing. The general contractor builds it. The building gets branded. A broker sells or leases it. The developer is responsible for bringing all of those people together and making sure everyone is moving in the same coordinated direction while protecting the project’s budget, schedule, and profitability.

What I’ve learned over the years is that experience isn’t just about knowing more. It’s about recognizing problems before they happen. After enough projects, you start seeing patterns. You know when an architect is over-designing something that won’t create any additional value. You recognize when a financing structure leaves too little room if the market changes. You can tell which consultants consistently perform well and which ones tend to cause delays. Those aren’t things you learn in a classroom. You learn them by living through projects, making mistakes, and paying for them. And believe me, those lessons can be very expensive.

I’ve seen projects where unnecessary design decisions increased construction costs by twenty or thirty percent without increasing the value of the property. I’ve seen financing structures that looked great on day one but became major problems when interest rates changed. I’ve met owners who spent months pursuing approvals that were never realistic. I’ve made mistakes myself that I would never make today. Every experienced developer has. That’s how experience is built.

When people ask me why they should partner with an experienced developer instead of trying to do it themselves, my answer is simple.

Because I’ve already paid the tuition.

If I owned a valuable piece of land today but had no development experience, I wouldn’t try to figure it out on my own. I’d partner with someone who has already been through the process many times. Not because I couldn’t eventually learn it, but because I know how expensive that education can be. Whatever I gave up in a development fee or partnership interest would likely be far less than what I would save by avoiding major mistakes and making better decisions from the very beginning.

I think that’s where many property owners get stuck. They focus on what they’re giving up instead of what they’re gaining. They see the developer’s fee or ownership interest, but they don’t see the hundreds, if not thousands, of decisions that can either create value or destroy it. On a multimillion-dollar project, one bad decision can cost hundreds of thousands of dollars. Several bad decisions can cost millions. Suddenly, partnering with someone who has already been through those situations doesn’t seem expensive at all.

Not everyone has the opportunity to own a piece of land with real development potential. I certainly didn’t. I learned this business the slow way, one project at a time over several decades. But if someone came to me today and said they inherited a great property or had been operating a business on land that was ready for redevelopment, I wouldn’t tell them to spend the next twenty years trying to become a developer. I’d tell them to find the right development partner and let experience work in their favor.

No developer can guarantee success, but an experienced developer can dramatically improve the odds of success. Real estate will always involve risk. Markets change. Construction costs change. Unexpected problems come up on every project. But an experienced developer has usually seen many of those situations before and knows how to adapt when they happen.

Looking back over my career, I can honestly say that some of my greatest assets came from my biggest mistakes. Although they were expensive, they became invaluable lessons. Those lessons are something I now pass on to others so they don’t have to learn them the hard way.

That’s why I believe an experienced developer doesn’t cost you money. More often than not, they save you money. They create value you may never have seen, avoid mistakes you didn’t know were coming, and help guide one of the largest financial decisions you’ll ever make.

In my experience, that’s an investment that pays for itself many times over.

Photo by Zhen Yao on Unsplash