How to Become a 7-Figure Commercial Real Estate Developer
The 3 levels of real estate development
If you want to go big in real estate, becoming a developer is where the real money is over the long term.
But here’s the problem…
Isn’t development risky?
Don’t you need tons of capital?
Isn’t development complicated?
Today I’m going to demystify the path of becoming a real estate developer.
Phase 1: Small scale
Phase 2: Medium scale
Phase 3: Large scale
Take it from this concrete guy who dropped out of college with 12 credits left.
If I can go on to become a developer with multi-million-dollar apartment, storage, and commercial development projects — so can you.
Let’s dive in.
First…what is a real estate developer?
A real estate developer is responsible for overseeing and managing the development of real estate projects from inception to completion.
Developers are focused on land acquisition, financing, project planning, construction, marketing, and sales.
5 Skills of a Successful Developer:
Vision, Creativity
Financial Knowledge
Negotiation Skills
Project Management
Networking, Capital Raising
These skills are built over time. Nobody has them all to start.
A lot of the skills to become a successful developer are learned from starting and honing different skill sets along the way.
1. The Small Scale Developer
In this stage, you are the team.
Most of what you’ll need to do to complete your first development will come from you and not a team (that’s in the next stage.)
Finding a small parcel of land
Choosing a small project to build
Deals between $1M-$5M
Raising capital from family, friends
Overseeing the project from A-Z
This is the stage before you’ve built a strong developer skillset, relationships to raise millions in capital, and a track record for developing profitable projects.
You won’t have a team, you will wear many hats.
2. The Medium-Scale Developer
You can’t avoid the small-scale development stage unless you’re lucky and have a network of other developers and investors.
But after a few small-scale development projects, you want to move to the medium-scale stage as soon as you’re ready.
This is when it gets fun.
Deals between $5M-$20M
More upside (and downside)
Starting to build a team
Raising capital from LPs
At this point, you are running a business and looking for talented people and larger investors to scale to larger projects.
The complexity grows here, but so does the upside with larger projects.
3. The Large-Scale Developer
I’d consider myself a medium-scale developer growing into a large-scale developer.
You won’t get to this stage fast, and maybe you never want to grow to this stage. You can make a great living in stage 2!
But if you want to grow to a large-scale developer over the next decade or two, here’s what the path can look like.
$10M-75M+ projects
Focused on a specialty niche
Institutional investor relationships
Lots of complexity and large teams
Multiple projects in multiple states
Successful developers are some of the wealthiest people in the U.S. for a reason…there is lot’s of upside equity but it is really hard to get to this stage.
You need skills, relationships, efficient planning, and the ability to handle stressful situations.
This is simplified, but hopefully gives you an idea of the different stages of becoming a real estate developer.
Watch the video above for more color and follow my YouTube channel to keep learning with me as I grow my luxury storage development company.
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See you next week,
Marc Kuhn