A real estate developer is a person or company responsible for the construction or renovation of an entire property, whether it's residential housing, office buildings, retail spaces, or industrial facilities. The developer will oversee the project from start to finish, from acquiring the land to the final sale or leasing of the property.
What Does a Real Estate Developer Do?
Common responsibilities of a real estate developer include:
- Scouting land and planning the project
- Acquiring the rights to the land and planning the demolition of existing structures
- Managing the budget
- Working closely with investors, architects, and engineers to develop the property
- Obtaining the necessary permits and licenses to complete the project
- Determining an exit strategy to sell or lease the property once construction is complete
Some real estate developers invest their own funds into the project, while others finance the deal or pool funds from other investors. But the developer's primary responsibility is to plan the project and supervise every facet of the construction to ensure the project is successful.
Due to the amount of capital and risk required to be a successful real estate developer, it isn't as easy a position to break into as flipping houses or buying rental properties. So most real estate developers must have at least a bachelor's degree and the requisite work experience to convince other investors and partners that they have the knowledge and aptitude to successfully manage the project.
Real estate developers can either work independently or with an existing firm, so the exact requirements may vary depending on the project and the market. Some states also require real estate developers to obtain a contractor's license before leading a project. But while the exact requirements vary, real estate developers must have at least a college education and an impressive resume of relevant work experience before they can venture out on their own.
- Earn a Bachelor's Degree (and Maybe a Masters)
- Get Experience in the Field
- Get Licensed
- Build a Network
- Learn as Much as You Can
1. Earn a Bachelor's Degree (and Maybe a Masters)
While many careers in the real estate industry don't require formal education, real estate development is different. There are so many moving pieces involved that you'll need extensive work history before you can manage a project independently. Getting a bachelor's degree is the first step to gaining that work history.
Depending on where you go to school, there may or may not be a program in real estate development. But business administration, finance, law, engineering, and construction management are all undergraduate degrees that will serve you well as a developer. Those who wish to accelerate their careers may also go for a master's degree, although it isn't required to succeed.
2. Get Experience in the Field
Before becoming a developer, you'll need some experience in the real estate industry. You may decide to look for work at an existing real estate development firm, or you may choose an ancillary field such as real estate finance or construction and learn the ins and outs of the business. Everyone's path to becoming a developer is different, and so your career trajectory will depend on your strengths and weaknesses, but you must have a solid work history before you can become a successful developer.
3. Get Licensed
Many states will require you to have a real estate license before you can become a developer. So rather than waiting until it's needed, you should begin studying and take the state exam while working toward your professional goals. Some states, like New York and California, also require a contractor's license, so study the local requirements.
4. Build a Network
You can't develop a property all on your own, so you'll also want to work toward building a professional network of other real estate professionals. Attend local real estate meetups, trade shows, seminars, professional events, and parties hosted by anyone in the real estate industry. Try to connect with real estate agents, investors, architects, engineers, bankers, contractors, and anyone else involved in the real estate business. The larger your network, the easier it will be to find reliable partners when the time comes.
5. Learn as Much as You Can
Becoming a real estate developer involves wearing multiple hats and taking on various responsibilities. So, you'll want to learn as much as possible about budgeting, contracts, negotiations, construction, and, most importantly, study the local market as closely as possible. You may even obtain special certifications to prove your knowledge and expertise.
Becoming a successful real estate developer takes time and patience. However, for those willing to put in the work, you can easily make six figures per year doing something fulfilling and necessary for society. But it can take many years of hard work and sacrifice before you make it to that level, so be sure you're ready to put in the work before you commit to development as a career path.
Is Becoming a Real Estate Developer Hard?
Yes, real estate development can be a challenging profession that requires patience and discipline to master. However, it's also a very lucrative career path that isn't more difficult than similar professions offering the same earning potential.
How Much Money Do Real Estate Developers Make?
The average real estate developer typically makes between $75,000 and $95,000 per year. However, top developers can make $250,000 per year or more. Some developers work for an existing firm and earn a comfortable salary that is often much higher than other construction professionals. Others venture out on their own and can earn a more substantial share of the profits, yet also suffer the consequences if the project is unsuccessful. So, while the earning potential is significant, it all depends on your experience and skill level.
Is a Real Estate Developer the Same as a Builder?
Not exactly. While developers and builders share some of the same responsibilities, a builder is typically only concerned with the construction of a property, whereas a developer will take on additional responsibilities, such as the land acquisition and hiring of construction professionals.